Dillard announced his lieutenant governor pick late Monday on Instagram with a video message.
Tracy is a Quincy Republican who first took office in 2006 and is a member of the bipartisan pension panel tasked with trying to find a solution to Illinois' nearly $100 billion pension problem.
Dillard is set to make the announcement official Tuesday with a statewide tour, including stops in Quincy, Springfield and Rockford. Tuesday is the first day candidate petitions can be circulated.
The pair spoke at Washington Park in Quincy as part of the tour.
It's the first year lieutenant governor candidates will run with governor candidates on the same ticket.
Tracy will not seek re-election as state representative.
Tracy said Tuesday that she was overwhelmed by the support of the people of her district and from people around the state. Dillard and Tracy said their platform will focus on creating a "healthy business climate" in the state of Illinois.
"Selecting Jil Tracy is a down payment for Illinois in growing the state and growing the business climate," Dillard said. "She has the experience to know how things work in Springfield and she is respected in the house and the senate by Republicans and Democrats."
Also Monday, Treasurer Dan Rutherford announced his running mate is Chicago attorney Steve Kim.
KHQA reporter Jim Whitfield contributed to this story.