Observers said the split was a victory for the Pakistani military's strategy of pitting militant factions against each other, while gaining the loyalty of key commanders.
Peace talks between the government and the Taliban that began earlier this year have stalled, with the military last week resorting to air strikes on militant hideouts killing at least 75 people.
The break-away faction belongs to the Mehsud tribe, widely considered the most important of the various groups that comprise the umbrella Tehreek-e-Taliban Pakistan (TTP) which has fought the government since 2007 to implement its version of Islamic Shariah law.
"We announce our defection from the Tehreek-e-Taliban Pakistan, we have chosen our Khalid Mehsud as the new leader for South Waziristan," Azam Tariq, a spokesman for the breakaway group said.
"Khalid Mehsud" was earlier known by the name "Khan Said Sajna" and was a contender for the TTP's leadership after its former chief Hakimullah Mehsud was killed in a US drone strike last November.
The post eventually was handed to Maulana Fazlullah who hails from the scenic Swat valley.
Since March, Khalid Mehsud's followers have been involved in bloody clashes with followers of the late Hakimullah Mehsud, who are now led by commander Sheheryar Mehsud.
Tariq, the spokesman, accused the TTP's leadership of criminality and of targeting civilians.
"The TTP leadership has fallen into the hands of a bunch of conspirators, the umbrella organisation is involved in criminal activities like robbery and extortion," he said in a statement.
Talking to AFP he added the TTP was carrying out bomb blasts in public places, actions which he termed "haram" (impure).
"We tried our best to put the group in the right direction, even the Afghan Taliban tried to mediate between us but the TTP did not pay any attention to the Afghan Taliban," he said.
The announcement came a day after Pakistani army chief General Raheel Sharif visited South Waziristan, one of the seven tribal districts along the Afghan border.
Saifullah Mehsud, an analyst at the Islamabad-based FATA research centre, said the split was a vindication of the army's divide-and-rule strategy.
"That is a success for the Pakistani army and for the rest of TTP it will be very difficult from now on," he said.
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