Ms Ley will retire from politics in coming weeks, triggering a battle to choose a new MP to represent her regional NSW electorate of Farrer.
Nationals Leader David Littleproud said his party would run a candidate, as would the Liberals.
"The reality is we'll have individual candidates, but there's a structured process around it," he told Sky News on Monday.
The two coalition partners usually don't compete against each other in most seats, but Farrer, which includes Griffith and the border city of Albury, is an exception.
Before Ms Ley won it in 2001, the electorate was held by former Nationals leader Tim Fischer.
Mr Littleproud and Mr Taylor met over the weekend to discuss the upcoming contest.
The Nationals leader said his party had struck a preference deal with the Liberals to ensure neither party would be disadvantaged.
"We'll back one another. That's the beauty of preferential voting. Our preferences will go to the Liberal Party first and foremost, and the Liberal Party's preferences will go to us," he said.
NSW MP Justin Clancy, who currently represents the state seat of Albury, has been floated as a potential candidate for the Liberals but no decision has been made by the party.
One Nation has also pledged to field a candidate, and leader Pauline Hanson has reportedly spoken with local independent Helen Dalton about running for the anti-immigration party.
Michelle Milthorpe, previously an advocate for victims of child sexual abuse, will again run as an independent after receiving nearly 20 per cent of the primary vote at the 2025 federal election.
Ms Milthorpe said the knifing of Ms Ley, the first woman to lead the Liberals federally, showed why she would be better-placed to represent the area than a major-party candidate.
"There's none of the party politics that seems to dominate every party," she told ABC Radio on Monday.
"We've seen the undermining of Sussan Ley as leader... I don't want that. Regional Australians don't want that."
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