The Scot guided Forest into an automatic-promotion spot following five successive league victories and a draw during the month.
The in-form Reds also defeated Preston in the FA Cup third round, with their only loss in January coming in the next round at West Ham.
Davies saw off competition from Sven-Goran Eriksson (Leicester), Kenny Jackett (Millwall) and Brian McDermott (Reading) to scoop the award.
Source: PA
Source: PA