The defender has put pen-to-paper on a two-year deal, which will keep him at Ewood Park until the summer of 2015.
Manager Gary Bowyer was pleased to add the 29-year-old to his ranks, believing his experience and versatility will prove vital for the season ahead.
“Matt is a good signing for us," said the Rovers boss. "He will bring a lot of experience from playing in the Premier League and in the Championship.
“He’s left-sided and has the ability to play in a couple of positions for us, both at centre half and at left-back.
“We’re delighted that he’s agreed to join us and we look forward to working with him.”
A highly-rated youngster, Kilgallon started his career with Leeds United, progressing quickly through their Academy before making his debut as an 18-year-old in their 4-1 UEFA Cup win over Hapoel Tel Aviv in November 2002.
A former team-mate of Paul Robinson, the central defender would go on to become a regular in Leeds’ senior squad, making 95 appearances and scoring three goals during a five-year spell.
In January 2007, Kilgallon made the move to South Yorkshire, signing for Sheffield United in a £1.75m deal.
After three successful years with the Blades, which included 126 appearances and four goals, Kilgallon joined Premier League side Sunderland in January 2010.
A regular early on in his career with the Black Cats, Kilgallon increasingly found first team opportunities limited due to a succession of managerial changes and spent loan spells with Doncaster Rovers and Middlesbrough before returning to the Stadium of Light at the start of the 2011-12 season.
The former England Under-21 international has linked up with his new team-mates on Rovers’ pre-season training camp in Portugal.
• Meanwhile, Rovers hope to conclude a deal to sign Alex Marrow from Crystal Palace later today.