Ellis, who celebrates his 88th birthday on January 3, has been recognised for his services to charity.
The self-made millionaire has invested heavily in hospitals and other charitable projects over the past three decades, with a particular emphasis on youth and sport.
Cheshire-born Ellis, who stepped down as Villa chairman in 2006, said: "I'm delighted and humbled by the honour. I'm so humble I can't believe.
"Everyone calls me Doug so I guess I'll be called Sir Doug now."
Ellis earned the nickname 'Deadly Doug' during his time at the Villa Park helm for his reputation for sacking managers.
He first took over the club in 1968 but left in 1979 before returning in 1982 and remaining in charge until the sale to Randy Lerner five years ago.
Ellis said: "I do miss it but I remain as president emeritus and as part of the deal I get my seats in the boardroom, seats in the directors' box and directors' box tickets for away matches.
"Randy Lerner is the owner of the Cleveland Browns and is committed there.
"He doesn't come too often and together with Paul Faulkner we look after his interests.
"I don't miss a game."
Ellis, whose father died when he was just three, rose from a humble background to make his fortune in the package holiday industry.
He went on to establish a construction company and owned properties at home and abroad.
His charity work began when he donated holidays as raffle prizes and grew into raising more than £6million to build Little Aston Hospital, the first of many projects.
Ellis, who has fought cancer himself, said: "That started it off and since then I have been very active in charities, particularly with children and youth and in sport.
"My wartime service in the Far East brought home to me just how little some people have and I have always tried to give something back.
"It has been a privilege for me to help so many local institutions and charities to further their work and influence."
Ellis said he is happy with the current state of the club, which he sold to Lerner for £65million.
He said: "I kept it stable, in the black. I don't borrow money because you only have to pay it back with interest. That's old-fashioned country boy thinking.
"I sold it without a penny of debt, which is unusual for a football club, to a good man five years ago."
Faulkner, the Villa chief executive, led the tributes to Ellis.
He said: "Everybody at Aston Villa would like to congratulate Sir Doug on receiving such an honour, having given so much to the local community over the years.
"As president of Villa, Doug has remained a very close friend and supporter of the club in recent years and we are delighted to see him receive such an honour."
Yet although he will now be known as Sir Doug, Ellis admits the name 'Deadly' will probably endure.
He said: "I've even called my boat Deadly."