Mr Nesbitt was addressing delegates at the UUP's spring conference.
"Without co-operation, there was a real danger that our capital city would have no pro-union MP after 7 May," he said.
Mr Nesbitt said its "pro-union potential" had not been maximised, as the DUP "would not discuss South Belfast in a practical manner".
"So, the understanding is not what (DUP leader) Peter Robinson wanted any more than it is what I wanted, but politics is about the art of the possible, and this arrangement was the best possible, given the different direction the DUP was approaching from," he said.
The deal involves four constituencies where the UUP and DUP will field a single candidate in May's general election.
The UUP is standing aside in both North and East Belfast in favour of the DUP.
In return, the DUP is encouraging support for UUP candidates in Fermanagh and South Tyrone, and in Newry and Armagh.
Ulster Unionist leader Mike Nesbitt has said his party's electoral pact with the DUP in four Westminster seats is the "best possible" arrangement.