Dion, who has been interim commissioner for a year, is a former chair of the National Parole Board and former deputy clerk of the Privy Council.
The integrity commissioner is an officer of Parliament and the nomination must be approved by both the Senate and Commons.
The commissioner reviews and investigates disclosures by public servants and members of the public about wrongdoing in the federal public sector.
He will also look at reprisal complaints from current and former public servants.
The Conservatives' first appointee in this job, Christiane Ouimet, retired unexpectedly before an investigation by the auditor general found she failed to perform her duties.