The 41-year-old, who has been with the football club nine years, has put pen-to-paper on a 12-month rolling contract.
Rovers’ managing director Derek Shaw said: "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."
After a playing career at Hereford United, Nottingham Forest and Rotherham United was cut short through injury, Bowyer went into coaching, joining Rovers from Derby County in the summer of 2004 in charge of the Under-18s.
Following six seasons developing Rovers' future stars at the Academy, in which they won the Academy League National Final once and the Academy League Northern Final twice, Bowyer moved up to take charge of the club's Reserve team, guiding them to the Premier League North title in 2010-11, Only losing out on penalties in the National Final.
In December 2012 Bowyer took over as caretaker manager of the senior side, his first spell in charge of the first team resulted in a run of three wins and a draw.
Following the dismissal of Michael Appleton in March 2013, Bowyer was re-appointed as caretaker manager until the end of the season, guiding the side to npower Championship safety during his nine games at the helm.
The new Rovers boss said: "It is a huge honour and a proud moment for me.
"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."