"If Hatnua-Labor won and formed a new coalition, I will serve as Prime Minister at the first two years and Livni will be prime minister for the following two years," Herzog told a press conference.
"We're uniting for the good of the country, for the better future of our children and grandchildren. We can only win together," he said.
Livni, the leader of the Hatuna Party, said that the deal aims to take Israel back from "radicals".
"Radicals ruined the Likud party," she said. "Together, we will win and Herzog will make a wonderful Prime Minister."
An opinion poll conducted by Israeli channel 10 showed that the Labor-Hatnua bloc could defeat the Likud Party of Prime Minister Benjamin Netanyahu in the election.
Israeli lawmaker on Monday unanimously approved a bill to dissolve the Knesset as a prelude to the early election slated for March 17.
The polls were called following the collapse of the ruling coalition government after Netanyahu sacked Livni and Finance Minister Yair Lapid earlier this month.