Ahmed Ludhianvi will represent the city of Jhang, in Punjab province, the commission ruled.
He came second in the constituency in a general election in May last year, but was awarded the seat after the commission ruled that the candidate who came first had been involved in vote rigging and had defaulted on a loan, the commission said in a statement on its website.
Ludhianvi declined to comment on the commission's Wednesday ruling.
He has previously denounced Shi'ite Muslims, who make up about 20 per cent of Pakistan's population, but has insisted he does not incite violence.
Activists worry that Ludhianvi's appointment will provide political cover for violent activists from the majority Sunni Muslim community, and fuel creeping militancy in Punjab, Pakistan's biggest and wealthiest province and the power base of Prime Minister Nawaz Sharif.
Tahir Ashrafi, chairman of clerical umbrella group the All Pakistan Ulema Council, told Reuters that he was worried about Ludhianvi's sectarian agenda.
"He ran an election campaign on his anti-Shi'ite agenda, it is not possible that he won't bring it into the Assembly. He will want to use parliament to declare all Shi'ites as heretics," Ashrafi warned.