Hateley is a free agent after a brief spell at Rangers where he played a minor role in helping them clinch their ninth successive Scottish Premier title. He had also been in talks with Raith Rovers.
The 35-year-old Hateley, who also played for Coventry City, Portsmouth, Milan, Monaco, Queen's Park Rangers and Leeds United, emerged as the first choice after previous attempts to lure Peter Beardsley and Chris Waddle failed. Others in contention included Gordon Cowans, who is at Stockport County.
Hateley, who had talks with new City chairman Tim Wilby over the weekend, will be allowed to bring in new players.
Dolan and his assistant, Jeff Lee, were originally dismissed more than two weeks ago, but a delay in the takeover meant they were called back to the club by the outgoing chairman, Martin Fish, to take training last week.
Yesterday's announcement brings to an end an unhappy six-year reign at Boothferry Park for the pair, who took the club down two divisions in their spell in charge.
The former England goalkeeper Chris Woods is set to become Chris Waddle's first signing at Second Division Burnley.
Waddle, less than a week into his first managerial job, is also hoping to land the versatile Michael Williams from Sheffield Wednesday, also on a free transfer.
Woods, who won 43 caps for England during an eight-year spell up to 1993 has played for six clubs including Norwich, Rangers and Wednesday.
He will be 38 later this year, but Waddle said: "Chris is the sort of experienced player we are looking for and he will combine his goalkeeping with some coaching duties with our keepers." Williams, 27, is another player known to Waddle from his time at Hillsborough.
Oxford have bought centre-back Phil Whelan from First Division rivals Middlesbrough for pounds 170,000. Whelan, 25,joins on a three-year contract.
Wigan have signed Bolton winger David Lee, 29, on a three-year contract for pounds 250,000.Reuse content