Rovers have been searching for a new boss since Brian Flynn opted to return to his post of director of football just days after leading the club to the League One title, with Michael Appleton heavily tipped for the role.
But Dickov has on Monday afternoon been confirmed as the man who will lead Rovers in the Championship next season.
The 40-year-old former Scotland international resigned as manager of Oldham at the start of February having been under pressure at Boundary Park following poor league form, earning a brief stay of execution after masterminding a famous FA Cup fourth-round victory over Liverpool.
He had been in charge of the Latics since June 2010 and won 43 of 141 games.
A statement on Rovers' official website read: "An 18 point criteria was set to identify the best possible candidate for the role. These criteria covered a whole range of aspects of the club in addition to the football.
"After completing the interview process, the board were in agreement that Paul was the best person to put their plans into action."
And the former Scotland international believes his new side will be able to compete in the second tier.
"It's a challenge but a challenge I am going to embrace," he said.
"I am a very positive person and without setting any specific targets we will go into next season with momentum and a lot of confidence to do really well.
"I don't think we can put a ceiling on what we can achieve. It's a fantastic club with fantastic people, it's stable and that is something that I have been striving for.
"I could say that our aim is to stay in the division but I think that sends out a negative vibe straight away.
"You have got to set your bar high and you never know what you can achieve.
"Yes we are going to have to get players with a real good quality, but the feel-good factor is already there."