Dick, 56, was previously the UK's national policing lead on counter-terrorism but left the Metropolitan Police to join the Foreign Office.
She takes over from Sir Bernard Hogan-Howe, who resigns from the post of Metropolitan Police commissioner at the end of this month.
Dick said in a statement: "This is a great responsibility and an amazing opportunity. I'm looking forward immensely to protecting and serving the people of London and working again with the fabulous women and men of the Met".
Dick had emerged as the frontrunner after candidates who had applied for the role were interviewed by a panel which included UK home secretary Amber Rudd and London mayor Sadiq Khan.
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Her choice was not free of controversy as she was in charge of the operation in 2005 when an innocent man, Jean Charles de Menezes,was shot dead by Met officers who mistook him for a suicide bomber.
A jury at a criminal trial in 2007 had exonerated her of any personal blame.
Rudd said: "Cressida Dick is an exceptional leader, and has a clear vision for the future of the Metropolitan police and an understanding of the diverse range of communities it serves".
"She now takes on one of the most demanding, high-profile and important jobs in UK policing, against the backdrop of a heightened terror alert and evolving threats from fraud and cybercrime.
The challenges ahead include protecting the most vulnerable, including victims of sexual abuse and domestic violence.
The mayor of London added: "Cressida Dick will be the first female commissioner of the Met in its 187-year history, and the most powerful police officer in the land. This is a historic day for London and a proud day for me as mayor".
Dick takes over at a particularly sensitive time for the British capital, which is at a high alert for a terrorist attack.
Dick beat competition to the top UK police job from National Police Chiefs' Council chairperson Sara Thornton, Essex Police chief constable Stephen Kavanagh and Scotland Yard's Mark Rowley.