The 65-year-old was selected by party members at a meeting at Claxby’s Viking Centre.
He beat Boston schoolteacher Jonathan Noble in a head to head contest, which saw the pair each have to give a speech and then answer questions from party members.
A third candidate, former Labour Party press officer Richard Bingley withdrew from the fight to tackle longsitting Gainsborough MP Sir Edward Leigh.
He said: “I am not a career politician. Until recently I never felt strongly enough to belong to a political party.”
“I have had a variety of real jobs in the real world and been successful. I have had good times and bad and can understand where many of you are coming from and empathise with your fears and frustrations.”
Mr Saxon then spoke on immigration, the European Union, the health service, terrorism, wind farms and foreign aid.
He added Gainsborough hasn’t changed in the years it has been represented by Sir Edward Leigh.
He said: “If you want a genuine change and a revitalisation of Gainsborough, Lincolnshire and the UK as a whole, vote to be independent of Europe, so we can sail our own ship.”
After the secret ballot, Gainsborough UKIP chairman Howard Thompson told those present “the hard work begins now” with the campaign.
Polls and academic analysis have shown UKIP in second place in Gainsborough, ahead of both the Liberal-Democrats and Labour, though the Conservatives, with Sir Edward Leigh, remaining well in front.