Raisi, a hard-line cleric who served for years on Iran's judiciary, is considered the main rival to President Hassan Rouhani, a pragmatist who is running for reelection.
Four other candidates have also entered the race, including Tehran Mayor Mohammad Baqer Qalibaf and Vice President Ishaq Jahangiri.
The clerical association, commonly referred to as Jame Modarresin in Farsi, is a group of seminary teachers from the holy city of Qom and has a number of high-profile hard-line clerics among its members.
A statement posted on the group's website Tuesday said that extensive discussions had taken place and that Raisi was chosen as the "best candidate."
Rouhani has pointed to the agreement signed with Western powers in 2015, which lifted a number of sanctions in exchange for curbs on the country's nuclear program, as his signature achievement. In particular, he says the deal gives Western companies an opening, which should improve the economy - a position that is anathema.
Raisi, who is thought to be the candidate favored by Supreme Leader Ayatollah Ali Khamenei, has blasted Rouhani's economic record in recent speeches and said that the country does not need foreign help.
Ayatollah Khamenei, the highest authority in Iran, has also criticized the Rouhani government's economic performance and called for more attention to be paid to unemployment.
About 3.2 million Iranians are jobless out of a total population of 80 million.
Last year,Ayatollah Khamenei appointed Raisi as the head of a multi-billion dollar religious foundation, and some observers say Raisi is possibly being groomed as the next Supreme Leader.
(Reporting By Babak Dehghanpisheh, editing by Larry King)
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