The former Aston Villa manager will lead at Ewood Park.
The report claims he did not think it was the right time for the Blackburn job and that if he took the role he would lose payment from his Villa sacking.
Sherwood, who rejected Blackburn in 2012 whilst a coach at Tottenham, captained Blackburn to the Premier League title in 1995 but it seemed he did not want to take the reigns.
However that report has now been countered by The Sun.
They reported earlier today that Paul Lambert was the number one choice for the role and that Sherwood was never approached by the club for the position.
The Championship side have now confirmed the appointment on their official Twitter account with the former Aston Villa man taking charge of the team.
Former West Brom boss Alan Irvine will be his assistant and he will be presented to the media on Monday.
Blackburn Rovers severed ties with previous manager Gary Bowyer last week. The club are currently 16th in the Championship and have won just once in their last six games.