Milkha Singh led expert committee after a long delibarations chose the wicketkeeper-batsman from Ranchi for the country's highest honour for a sportsperson.
Dhoni now becomes the second cricketer after Sachin Tendulkar to get the honour.
MSD recemmended for Khel Ratna
Sources close to Sports Ministry, however, informed that an official announcement in this regard will be made only after Aug 20.
Meanwhile, BCCI Chief Administrative Officer Ratnakar Shetty hailed the decision.
"On two occasions, we felt let down when Dravid didn't get Khel Ratna and Yuvraj was denied Arjuna. Dravid was in good form, we had won 16 ODIs on the trot and the team was on a high - still he did not get the award.
"Yuvraj too was unlucky not to get Arjuna after two years of consistent performance. We are happy Dhoni got it," he told Times Now channel.
Prof Shetty said what impressed him most about Dhoni was the way he conducted himself.
"What I like most about Mahi, apart from his cricket, is the way he leads. He is a cool customer and never gets agitated. I'm also impressed by his clarity of thought. He speaks his mind even if it may not be seen in the right sense," he added.