The 43-year-old ended his six-year stint as Croatia boss after Euro 2012 and had confirmed before the tournament that he would be heading to Russia with Lokomotiv.
However, the former Everton and West Ham United defender has regularly been linked with jobs in England and was mooted as a contender to replace Alex McLeish at Aston Villa.
He has also been tipped as a long-term successor to Everton boss David Moyes and Bilic confirmed there was interest from the Premier League.
"I had interesting proposals from England, the country which I can call my second home as I played a substantial part of my career in the Premiership," said Bilic.
"But I've chosen Lokomotiv. It's a very good team which has everything in place to become even better.
"The Russian league isn't the strongest European league, but it seems to be the most difficult as last season eight teams were battling for the domestic title. None of the other leagues can boast of such tough competition."
Bilic has outlined what he intends to bring to Lokmotiv and was persuaded to move to the Russian capital by the club's president Olga Smorodskaya.
He added: "I'm a realist and I understand that I was invited here not to keep the club at its current level but to create a better team, which will play more organised football like my Croatian national side did.
"I talked to the Lokomotiv president and was really impressed by her ambitions. Besides, her desire to see me at the post of Lokomotiv coach has won my heart."