Boss Steve Bruce said that it was one of the quickest transfers he has ever been involved with.
"When we were alerted to Damien's availability we have jumped in there and made sure we got him.
"He really wants to play first team football and I will give him that chance."
"He is a player that I like and admire and we had been monitoring his situation," said Bruce.
"He is young - only 23 - and has all the right credentials that I am looking for.
"He has already played 100 times for Blackburn and has featured in the Premiership this season.
"We are a bit light in the midfield area and he will prove to be a good acquistion for us."
"He can play anywhere across the midfield and has wonderful energy."
Rovers accepted a nominal fee of around £150,000 for Johnson, who rejected an approach from Nottingham Forest.
"I had been at Blackburn since I was a trainee and although some people may think it was a wrench to leave, it wasn't," he said.
"I didn't have the best of relationships with the manager and I'm glad to get away to be honest.
"I'm delighted to sign for Birmingham. I was impressed with Steve Bruce and Birmingham are a club with Premiership ambitions. I still think the club can make the play-offs this season and I think the manager believes that as well."
The 23-year-old could make his debut in the clash with Wolves at St Andrews and Bruce has added him to the Blues squad.