The decision comes after thousands took to the streets to urge Prime Minister Recep Tayyip Erdogan not to stand.
Secularists say Mr Erdogan's former Islamist links make him too divisive a figure to be president.
Parliament will hold the first round of voting on Friday, and the AK's majority means its candidate is likely to win.
Turkey has been a republic since 1923, with a strict separation of religion and the state.
The AK party has its roots in political Islam.
Speaking to the AK group in parliament, Mr Erdogan said Abdullah Gul "is the person who emerged at the end of our evaluations as the candidate to become Turkey's 11th president".
There will be several rounds of voting in the 550-member parliament before the new head of state takes office on 16 May.
Mr Gul, 56, has steered Turkey's European Union accession talks since becoming foreign minister in 2003.
He had a brief spell as prime minister after the AK party's election victory in November 2002.
