The LSE said it made the decision “in light of the increasing diversification, scale and reach of and also in line with good corporate governance". The appointment is expected be confirmed in summer 2014.
PwC earned £1.6m from its audit of LSE in 2013 and a further £900,000 from non-audit services.
The world’s largest accountancy firm has lost a number of prized audit contracts recently, including both Marks & Spencers and housebuilder Berkeley.
FTSE 100 retailer M&S replaced PwC for the first time since 1926, appointing fellow Big Four member Deloitte.
Unilever also announced it is set to replace PwC as auditors with KPMG, ending its 26-year relationship. PwC received £18m from Unilever in 2012, making it one of the most lucrative FTSE 100 audit contracts.
The news comes in the week it was agreed EU listed companies and public interest entities will be required to put out their audit to tender every 10 years and they will only be able to keep the same auditor for 20 years. Audit firms will find their non-audit service fees capped and certain non-audit services banned where audit clients are concerned.