How to configure Visual Studio to use Beyond Compare

In Visual Studio, go to the Tools menu, select Options, expand Source Control, (In a TFS environment, click Visual Studio Team Foundation Server), and click on the Configure User Tools button.

Click the Add button.

Enter/select the following options for Compare:

• Extension: .*
• Operation: Compare
• Command: C:\Program Files\Beyond Compare 3\BComp.exe (replace with the proper path for your machine, including version number)
• Arguments: %1 %2 /title1=%6 /title2=%7

If using Beyond Compare Professional (3-way Merge):

• Extension: .*
• Operation: Merge
• Command: C:\Program Files\Beyond Compare 3\BComp.exe (replace with the proper path for your machine, including version number)
• Arguments: %1 %2 %3 %4 /title1=%6 /title2=%7 /title3=%8 /title4=%9

If using Beyond Compare v3/v4 Standard or Beyond Compare v2 (2-way Merge):

• Extension: .*
• Operation: Merge
• Command: C:\Program Files\Beyond Compare 3\BComp.exe (replace with the proper path for your machine, including version number)
• Arguments: %1 %2 /savetarget=%4 /title1=%6 /title2=%7

If you use tabs in Beyond Compare

If you run Beyond Compare in tabbed mode, it can get confused when you diff or merge more than one set of files at a time from Visual Studio. To fix this, you can add the argument /solo to the end of the arguments; this ensures each comparison opens in a new window, working around the issue with tabs.

Visual Studio with Git for Windows

If you're using GIT as your source code management system instead of the (fairly dated) TFVC then Visual Studio doesn't have options to configure anything like this.
Instead it (rightly in my opinion) uses the GIT config file's setting. So if you already have GIT setup to use Beyond Compare or any other third party comparison software it will just pick this up and start using it.

If not then just set that up (see here for further and likely more up to date help). The relevant info for setting up Visual Studio with Beyond Compare 4 is:

1. Open Visual Studio.
2. Select Options from the Tools menu.
3. Select Plug-In Settings under the Source Control branch of the left-side tree control.
4. Select Microsoft Git Provider under Plug-In Settings on the right-hand pane.
5. Edit the global git config file (location is OS specific for windows it's %HOMEDRIVE%%HOMEPATH%/.gitconfig. See here for info) OR if you want it to be repo specifict then after starting a project in a Git repository, edit the config file in the .git folder in the project folder.

6. Change the config file to reflect the following changes:

   [diff]
       tool = bc4
   [difftool "bc4"]
       cmd = \"C:\\Program Files (x86)\\Beyond Compare 4\\BComp.exe\" \"$LOCAL\" \"$REMOTE\"
   [merge]
       tool = bc4
   [mergetool "bc4"]
       cmd = \"C:\\Program Files (x86)\\Beyond Compare 4\\BComp.exe\" \"$REMOTE\" \"$LOCAL\" \"$BASE\" \"$MERGED\" 
   

If 64bit installer is used, verify the name of the executable. Mine was BCompare.exe

[diff]
    tool = bc4
[difftool "bc4"]
    cmd = \"C:\\Program Files\\Beyond Compare 4\\BCompare.exe\" \"$LOCAL\" \"$REMOTE\"
[merge]
    tool = bc4
[mergetool "bc4"]
    cmd = \"C:\\Program Files\\Beyond Compare 4\\BCompare.exe\" \"$REMOTE\" \"$LOCAL\" \"$BASE\" \"$MERGED\"

Issues: If you create a new project and get VS to create the git repo at the same time it WILL add a load of overrides to the .git/config file forcing it to use Visual Studio again (Thanks for that MS!). SO either create the git repo via another means after the project has been setup (like via SourceTree or the command line etc...) OR edit the .git/config file (in the solution folder) and remove any overrides for the above settings.
Thanks to minnow in the comments for bringing my attention to it again.

Note: I keep coming across this but I am using VS with GIT and the answers aren't correct and although some of the comments mention a URL with the correct answer it's not clear and if I kept missing it I'm sure others will so hopefully this will solve that issue.

If you are using the TFS, you can find the more information in diff/merge configuration in Team Foundation - common Command and Argument values

It shows how to configure the following tools:

• WinDiff
• DiffDoc (for Word files)
• WinMerge
• Beyond Compare
• KDiff3
• Araxis
• Compare It!
• SourceGear DiffMerge
• Beyond Compare 3
• TortoiseMerge
• Visual SlickEdit

I got bored of doing this every 6 months when a new version of Visual Studio comes out, or I move PCs, or a new member joins the team. So, PowerShell:

# .Synopsys
# Sets up Beyond Compare professional as Diff tool for all instances of Visual Studio on this PC
# If you don't use TFS, change the sccProvider as appropriate
[CmdLetBinding()]
param(
    $bcPath = 'C:\Program Files (x86)\Beyond Compare 3\BComp.exe',
    $sccProvider = 'TeamFoundation'
)

$ErrorActionPreference = 'stop';
$baseKey = 'REGISTRY::\HKCU\Software\Microsoft\VisualStudio\*'

function SetRegKeyProperties($keyPath, [hashtable]$keyProps){
    if(!(Test-Path $keyPath)){
        Write-Verbose "Creating $keyPath"
        # Force required here to recursively create registry path
        [void] (new-item $keyPath -Type:Directory -Force);
    }
    foreach($prop in $keyProps.GetEnumerator()){
        Set-ItemProperty -Path:$keyPath -Name:$prop.Key -Value:$prop.Value;
    }
}

$configBases = dir $baseKey | ? { $_.PSChildName -match '^\d+\.\d$' }
foreach($item in $configBases){
    Write-Host "Configuring $item"

    $diffToolsKey = Join-Path $item.PSPath "$sccProvider\SourceControl\DiffTools"
    SetRegKeyProperties (Join-path $diffToolsKey '.*\Compare') @{Command=$bcPath;Arguments='%1 %2 /title1=%6 /title2=%7'}
    SetRegKeyProperties (Join-path $diffToolsKey '.*\Merge') @{Command=$bcPath;Arguments='%1 %2 %3 %4 /title1=%6 /title2=%7 /title3=%8 /title4=%9'}
}

Works on my machine. YMMV. No warranties, no refunds. VS doesn't appear to cache the key, so takes effect immediately.

In Visual Studio 2008 + , go to the

Tools menu -->  select Options 

In Options Window --> expand Source Control --> Select Subversion User Tools --> Select Beyond Compare

and click OK button..