Italian Di Matteo has been appointed as Villa's new boss on a two-year deal and returns to England almost four years after being sacked by Chelsea.
Villa were relegated from the top flight for the first time since 1987 having won just three games last season and went through four managers.
Dublin was Di Matteo's neighbour when the pair lived in the midlands, with Di Matteo managing MK Dons and West Brom, and believes the former Schalke boss is the perfect fit for Villa.
He said: "Villa are such a big football club and well respected that the Championship is not so much of a drop down for him
It's a very hard league to get out of but it's a sign of Roberto saying 'okay, I'm happy to take on the challenge, I don't want everything put on a plate for me'.
"The team isn't good enough to be in the Premier League at the moment so it's down to Roberto to prove how good he is and how good his recruitment is to get them back into the Premier League
I'd back him all the way."
Di Matteo, who won the Champions League as Chelsea boss in 2012, replaces Remi Garde, who left in March after just 23 games in charge.
Caretaker boss Eric Black oversaw their inevitable relegation as Villa finished bottom of the Premier League.
Di Matteo must overhaul an under-performing squad and faces losing key striker Jordan Ayew, but Dublin feels he can cope.
"I think he'll be very good
I know him reasonably well and his enthusiasm for the game and knowledge is very good," said Dublin, talking at the launch of Jewson's Back of the Net competition
"It's got to be if you win the Champions League.
"To get Roberto as manager at Villa Park can only be a very positive sign.
"I lived opposite him for three years so know him quite well
He also, unfortunately, scored the goal for Chelsea against Villa when we lost in the FA Cup final in 2000
I should really want to throttle him but he's too much of a nice bloke and was a very good player
Now I feel he has got the knowledge to take Villa forward."
Source : PA
Source: PA