"I have just come off the phone with Wolverhampton Wanderers' chief executive Jez Moxey, at 8.50pm Sunday evening, and can confirm Dean Saunders has agreed to take over as manager at Molineux," he said.
"We have agreed a good deal for Doncaster Rovers. Work has already started on trying to find a replacement for Dean and we continue our push for promotion to the Championship.
"I have spoken with Dean to thank him for the fantastic job he has done here at Doncaster and wish him well for the future."
Saturday's FA Cup third-round defeat to Luton proved to be the final straw for a Wolves board who have watched Solbakken fail to get a side relegated from the Premier League last season back on track. With just three wins in 16 they languish in 18th place in the league, with the club describing results as "hugely disappointing".
Solbakken, 44, joined the midlands club last summer with the former Wimbledon midfielder -- once pronounced clinically dead after suffering a heart attack in training -- boasting five Danish titles won in charge of Copenhagen.
Saunders is Wolves' fourth boss in less than a year after the departures of Mick McCarthy and Terry Connor.