After helping the Reds avoid relegation from the Championship following his spell as first-team coach under Steve Cotterill last season it is a post that many speculated the former Doncaster boss would step up to but certainly not in the circumstances that have surrounded his appointment.
The 55-year-old leaves Crawley Town having not taken charge of a competitive game and returns to the City Ground with the club in the charge of new Kuwaiti owners.
"It was an easy decision to make to return to Nottingham Forest," said O'Driscoll.
"I enjoyed my time working with the players last season, and even in sometimes difficult circumstances the fans gave the kind of support you don't often see in football today.
"The Al-Hasawi family's ownership opens exciting prospects for this club and I look forward to rebuilding the squad and playing the kind of attractive football the City Ground deserves to see."
Although the Al-Hasawi family have made something of a rod for their own back with talk of an 'iconic' manager they have in fact done well to ignore some of the bigger names linked with the job in favour of a man who knows the current squad well, a commitment to a style of football that is very pleasing to the eye and someone who will be able to look to the long as well as short-term needs of the club.