She succeeds Sir Bernard Hogan-Howe, who announced his retirement last year.
Ms Dick, previously the national policing lead on counter-terrorism, said she was "thrilled and humbled".
But her appointment was criticised by the family of Jean Charles de Menezes, who was wrongly shot dead during an operation she led in 2005.
The Brazilian electrician was killed two weeks after the 7/7 London Bombings when he was mistakenly identified as a terror suspect.
A jury later found the Met had broken health and safety laws, but found there was "no personal culpability for Commander Cressida Dick".
Ms Dick, 56, left the Met for the Foreign Office after 31 years of service in December 2014.
She was chosen for the commissioner's job ahead of National Police Chiefs' Council chairwoman Sara Thornton, Essex Police chief constable Stephen Kavanagh and Scotland Yard's Mark Rowley.
Her appointment means that for the first time all three top policing jobs in the UK are held by women: the Met commissioner, the head of the National Crime Agency and the president of the National Police Chief's Council.
Ms Dick's statement said: "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.
"Thank you so much to everyone who has taught me and supported me along the way."
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