Mr McFarland has been an MLA for 12 years
Ulster Unionist MLA Alan McFarland has resigned from the party.
Mr McFarland said he was uncomfortable with the electoral link-up the UUP entered into with the Conservative Party in 2008.
A UUP statement said the timing of Mr McFarland's announcement was "disappointing".
However, it continued that it had not been "unexpected following the resignation of Lady Sylvia Hermon last week".
In a statement revealing his resignation, Mr McFarland said the Ulster Unionist and Conservative alliance was "detrimental" to unionist interests in Northern Ireland.
The move comes five days after North Down MP Lady Hermon left the party, saying she would run as an Independent in the general election.
BBC NI Political Reporter Stephen Walker said it was a "setback" for the UUP.
"Alan McFarland who has been a MLA in North Down for 12 years said he has been uncomfortable with the electoral pact with the Tories for some time.
"He said he has tried to persuade the party leadership and his colleagues that the link up would be detrimental to unionist interests.
"His resignation, just days before the start of an election campaign, could not come at a worse time for the Ulster Unionists."
On Tuesday night Mr McFarland resigned his membership of the party and said he would now sit as an independent member of the assembly.
"With the recent confirmation of candidates, including the imposition of a Conservative candidate in my own North Down constituency, it is clear that the party is determined to continue down the Conservative road," said Mr McFarland in a statement.
"I do not wish to join them. I am sorry to leave a party that contains many good friends, and greatly regret that events have developed in the way they have."
Last week the North Down MP Lady Hermon said she would run in the general election as an independent unionist.
It is expected that Mr McFarland will support Lady Hermon's bid to retain the seat.
The Ulster Unionist statement thanked him for his service to the party, but said the "electoral pact has the potential to transform politics in Northern Ireland in a manner not previously witnessed" in Northern Ireland.