Key attributes his switch to a fractured and transforming Republican party.
"For too long, the Republican party has been at war with itself. Rational Republican beliefs have given way to ideological character assassination," he says. "Pragmatism and principle have been overtaken by pettiness and bigotry."
Key also criticizes federal Republicans for shutting down the government in an effort to defund the health care law.
"I cannot place my name on the ballot of the political party that is proud to destroy the lives of hundreds of thousands of federal workers over the vain attempt to repeal a law that would provide health care for millions of people throughout our country," he says in the ad.
Key's party switch had been speculated about for a few months after he attended a fundraiser for Democratic State Senator and gubernatorial candidate Wendy Davis, the San Antonio Express-News reports.
Key said in a statement Monday that he believes more Republicans will follow him and make the switch.
"As the smallest minds continue to make the loudest noise in the Republican Party, true leaders will be driven by their principles and values to become Texas Democrats," he said in the statement.
Watch Key's campaign video here: