"We are delighted to welcome Nigel to the club," Derby Chairman Mel Morris told Derby's website (www.dcfc.co.uk).
"He is a proven winner, a highly experienced manager who has track record of success in the Championship and has also coached successfully in the Premier League."
Pearson took over for a second spell at Leicester in November 2011 and led them back to the Premier League from the Championship.
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The 52-year-old guided the Foxes to top-flight safety in the 2014-15 campaign after they appeared destined for the drop for much of the season. He was sacked in the close season, however, following a breakdown in his relationship with the club's owners.
Leicester romped to the Premier League title this year under Pearson's replacement, Italian Claudio Ranieri, after starting the season as 5,000-1 outsiders.
(Reporting by Ian Rodricks in Bengaluru, editing by Ed Osmond)
