Bowyer has had two spells in caretaker charge of Rovers this season and has now been handed the reins on a permanent basis.
The 41-year-old has spent the past nine years at Ewood Park working with the Academy and reserves before he was initially placed in temporary first-team control in December following the sacking of Henning Berg.
He resumed that position in March after Michael Appleton left and Bowyer managed to keep Blackburn in the Championship during the final nine games.
"It is a huge honour and a proud moment for me," Bowyer told the club's official website.
"I have been at the club for nine years, I know the traditions. The foundation of the club was built on hard work and that is what we need to produce.
"The supporters want to see the players out there playing for the shirt and giving it their all. We need the players to show the same passion that the fans gave us during our last six games where we just lost the once."
Blackburn managing director Derek Shaw added: "In the two spells as caretaker manager Gary achieved approaching two points a game.
"He has the respect of the players and we feel his in-depth knowledge of working with the youngsters will be of great benefit to Rovers.
"He is held in high regard in football and we certainly wish him all the best going forward."