Congress leader Ghulam Nabi Azad, who is in charge of party affairs in Uttar Pradesh, said Dikshit was chosen as party's face for the polls considering her strong credentials as Chief Minister of Delhi for three consecutive terms.
Election strategist Prashant Kishor had recommended that Dikshit should play a major role in the party's poll campaign in the state projecting her as a prominent Brahmin face and could help Congress regain support of the electorally sizeable community.
Her 15-year tenure in Delhi as CM ended with the emergence of AAP in 2013 polls in which Congress lost power.
Announcement of Dikshit's name as CM nominee came days after the party appointed actor-turned-politician Raj Babbar the chief of the Congress in UP.
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"Her experience and good work were considered as her big credentials by the party," Azad told a joint media briefing with party leader Janardan Dwivedi.
On her part, Dikshit thanked the party leadership for entrusting her with such a "big responsibility", adding she would like to have Priyanka Gandhi campaign with her across the state.
"She (Priyanka) is a very popular leader. My plea would be that she campaign across the state," Dikshit said.
Acknowledging that it will be "major challenge" for her in UP, Dikshit said Congress will go to the polls with confidence and that the party will take on BJP, ruling Samajwadi Party and BSP equally.
The Congress feels making Dikshit, a Brahmin, the face of campaign in Uttar Pradesh will help the party win back support of the community.
The Brahmin community, a traditional vote bank of Congress, had shifted allegiance to BJP in the aftermath of the Mandir-Mandal politics.
A large chunk of Brahmin votes had also gone to Mayawati's BSP in the past when she gave tickets to many candidates belonging to the community.
Dwivedi said Congress president Sonia Gandhi has also appointed former Union minister R P N Singh as the senior vice president of Uttar Pradesh Congress Committee, along with the four senior vice presidents announced two days ago.
He said Zafar Ali Naqvi has been made the convener of the Campaign Committee to be headed by Sanjay Singh, and it will have four vice chairmen - Jitin Prasad, Abdul Mannan Ansari, Gayadin Anuragi and Chaudhary Bijender Singh.
The Coordination Committee headed by Rajya Sabha member Pramod Tiwari will have senior Congress leaders Mohsina Kidwai, Salman Khurshid, Shriprakash Jayaswal, Rajiv Shukla, Rita Bahuguna, Salim Sherwani, Pradeep Jain Aditya, P L Punia, Nirmal Khatri and Pradeep Mathur as its members.
To a question on why Congress was forced to project a chief ministerial candidate in Uttar Pradesh as it normally did not, Azad retorted, "What is the harm in that? If we have done, it is very good. We have not done that as a rule, but exceptions have been there. We have done it in the past as an exception."
He chose to remain silent on any role chalked out for Priyanka for Uttar Pradesh.
The senior Congress leader said the party will launch its poll campaign in "due course of time" after its organisation is put in place and after discussions and coordination with the new PCC.
"I am sure the final shape will take place very soon," he said.
On Dikshit being summoned by the Anti-Corruption Bureau, he maintained that according to her, these are mere allegations with "just two governments - government of India and state government, trying to be revengeful to our ex-chief ministers, that does not mean they are involved in those cases".
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Congress vice president Rahul Gandhi later also met Azad and Sheila Dikshit after her name was announced as Congress' chief ministerial face for Uttar Pradesh assembly elections slated early next year.