Francois Fillon, a socially conservative free-marketeer, has won France's presidential primaries.
It sets up a likely showdown for him next year with nationalist leader Marine Le Pen.
In last week's first round Les Republicains party primary, he knocked out former president Nicolas Sarkozy under whom he served as prime minister from 2007 to 2012, and pushed Mr Juppe into second place.
Mr Fillon has promised to change the culture and build a fairer society for all French people.
"If the French people entrust me with their confidence I will try to respect that contract and to hold myself with dignity. I understand the severity of the situation and the needs of my compatriots. I will discuss this over the coming months. I will take up an unusual challenge for France to tell the truth and to completely change its software."
Current polls indicate Mr Fillon would easily beat Ms Le Pen in a run-off second round.
The former prime minister wants to raise the retirement age, cut back social security and scrap the 35-hour working week.
In a statement, former president Mr Sarkozy called for unity, saying the moment had arrived to rally around Mr Fillon to guarantee France gets an alternative to the policies of current president Francois Hollande's Socialist Party.
Conceding defeat, Mr Juppe says he will support Francois Fillon.
"I congratulate Francois Fillon for his substantial victory. The right and the centre's primary was carried out in good conditions, thanks to the high authority in charge of the primaries and the organising committee whom I salute. And as promised, I give my support to Francois Fillon. I wish him good luck for his upcoming presidential campaign and victory next May."
Mr Fillon is now expected to go up against the leader of the National Front, Marine Le Pen, in the second-round run-off of the presidential elections next May.
The party's deputy leader, Florian Philippot [flor-ee-AHN fil-ip-O], says Mr Fillon's economic program is harsh, and his views are outdated and won't be supported by the French people.
"He has a program -- which he completely takes responsibility for, which perhaps does him credit -- that is so sharply different from ours, and is a program that is very harsh, and cannot bring together a majority of French people."
Next year's presidential poll in the Eurozone's second-largest economy are shaping up to be another test of the strength of anti-establishment parties in Western countries.
French voters are angry with high unemployment and fearful after a wave of Islamist militant attacks.
All eyes now turn to whether President Francois Hollande will decide to run in his party's primaries in January, amid signs that his prime minister, Manuel Valls, is considering a bid of his own.
