Having overseen the continuing rise of Doncaster Rovers until his departure in September, O'Driscoll's name has been linked with a number of managerial posts since then.
Now however he has opted to link up with Cotterill on a deal until the end of the season.
"Sean and I go back a long way," said the Forest boss, who will realise that with his own position being questioned by some supporters O'Driscoll will be seen as a potential successor.
"We're old friends, and I'm delighted to have been able to add him to my coaching staff.
"I've no doubts he will be a great addition to my backroom team."