I won’t take credit for this, but it is necessary if you ask me. The TFS merge tool is awful. I am posting the link below for the credit.
Go to Tools, Options, Source Control, Visual Studio Team Foundation Server, Configure User Tools, and Add.
From there it is pretty intuitive.
The above just shows the simple configuration for comparing files. It doesn’t show how to configure DiffMerge as your merge tool.
First, the above arguments work, however the documentation says to use the following arguments when setting up DiffMerge for comparing: /t1=%6 /t2=%7 %1 %2
To configure for merge, Add a new setting (step 3), repeat step 4, select Merge in Operation, repeat step 5, and use the following command line: /m /r=%4 /t1=%7 /t2=%8 /t3=%6 /c=%9 %2 %3 %1