Berg won the Premier League title as a player with Rovers in 1995 and is something of a legend at the club; he also won the league cup with the club in 2002.
"Blackburn can confirm that Henning Berg has accepted the role of manager." said the club on Wednesday
Berg made 297 appearances in total for Rovers and this appointment will be his first in the English game, but he has previously done well with Lyn Oslo and Lillestrom in his native Norway.
Rovers managing director Derek Shaw told Press Association Sport: "He interviewed well and he moved straight to the top of our list."