The 31-year-old, who spent a month on loan at Ewood Park last season, has put pen to paper on a two-year contract.
Blackburn manager Gary Bowyer told the club's official website: "He's a player who has huge experience and is a proven goalscorer at this level.
"He feels he has some unfinished business with the club and is hungry to succeed.
"He will add a different dimension to our attacking options and is the right character we want to have on board."
Campbell made seven appearances for Blackburn while on loan late last season but failed to score and his stint with the club was cut short by a foot injury.
He was signed by Brentford from non-league football in 2005 before a £500,000 move to Birmingham and then a £1.6million deal saw him move on to Leicester in July 2007.
Campbell had loan spells at Blackpool and Derby and duly signed permanently for the Seasiders in 2010 before being involved in another big-money transfer just a year later when QPR paid £1.2million for him.
Campbell is Bowyer's fifth signing following the arrivals of Simon Eastwood, Chris Taylor, Alan Judge and Todd Kane.