FileMerge quits immediately after launching from SourceTree

To diagnose the problem, I ran opendiff from the Terminal. I received the following error:

xcode-select: error: tool ‘opendiff’ requires Xcode, but active developer directory ‘/Library/Developer/CommandLineTools’ is a command line tools instance

To solve:

1. Open Xcode > Preferences > Locations
2. Click on the drop-down box beside Command Line Tools and select your current Xcode version. (This was empty for me because I had recently installed Xcode on a new Mac.)

3. Run opendiff in Terminal again, and the above error should no longer appear.

Now FileMerge will open correctly from SourceTree when you click Launch External Merge Tool.