MK Dons chairman Pete Winkleman had vowed to do all he could to keep the "the hottest young manager in English football" at his club and had previously rejected an approach from Leicester City to talk to Ince.
However, he has now agreed to take over at Blackburn ahead of the new season.
"Blackburn Rovers can announce that Paul Ince has been appointed the new manager of the football club," read a brief statement on the club's official website. Ince has signed a three-year contract.