Here is a step-by-step instruction how to configure Visual Studio with Team Foundation Server source control to use WinMerge instad of default viewer for file diffs and merging.

The original instruction was taken from Neovolve site

In Visual Studio do the following:

• Click on Tools menu
• Click on Options menu item
• Expand Source Control tree item
• Select Visual Studio Team Foundation Server tree item
• Click on Configure User Tools… button

Comparing

To use WinMerge as the Compare/Diff tool:

• Click the Add… button
• For Extension, type *
• For Operation, select Compare
• For Command, browse for C:\Program Files\WinMerge\WinMerge.exe
• For Arguments, type /x /e /ub /wl /dl %6 /dr %7 %1 %2
• Click OK to accept

Merging

To use WinMerge as the Merge tool:

• Click the Add… button
• For Extension, type *
• For Operation, select Merge
• For Command, browse for C:\Program Files\WinMerge\WinMerge.exe
• For Arguments, type /x /e /ub /wl /dl %6 /dr %7 %1 %2 %4
• Click OK to accept

Note: You need to click on the Save button on the tool bar within WinMerge merge to commit a merge before exiting the screen