The decision, taken at the General Council meeting of the S Ramadoss-led party, was announced by PMK chief G K Mani amid applause from the members.
The parting of ways by PMK had become almost certain as senior party leaders had blamed it for the Front's rout in the Assembly polls in Tamil Nadu in April.
Former Union minister and senior PMK leader Anbumani Ramadoss had recently said that anti-incumbency factor against the DMK had cost the PMK dearly.
PMK had contested 30 of the 234 Assembly seats, but won only three.
At today's meeting, a number of General Council members, including sitting MLA and firebrand leader J Guru, levelled charges against the DMK, saying despite being an ally, the PMK did not receive much cooperation from its lead partner and charged it with "deliberately plotting their defeat".
Explaining the rationale behind its willingness to lead a new alternative alliance, the General Council resolved that none of the parties -- Congress, AIADMK and DMK -- which had ruled the state had done any good to the people.
PMK said it will lead an alternative alliance in the upcoming panchayat elections as well as future polls, indicating that it will not ally with AIADMK also.