The team made the announcement Tuesday. Rolston and general manager Darcy Regier will hold a news conference later Tuesday at First Niagara Center.
Rolston becomes the franchise 16th head coach. He led the Sabres to a 15-11-5 record after Ruff was fired Feb. 20 following a 6-10-1 performance. Ruff spent 16 years as coach of the Sabres.
Before being selected interim coach, Rolston had coached the Rochester Americans, Buffalo's AHL affiliate, since 2011.
The Sabres finished 21-21-6 and missed the playoffs for a second straight year and fourth time in six seasons.