The former Galway United defender has committed to the club for a further season and will hope to cement the left-back spot upon his return from injury
Davoren joined the Bit O' Red in 2010 and has gone on to make 99 appearances during his time with the club. Sligo boss Ian Baraclough said that the 26-year-old will be 'a big asset' to the club when he regains his fitness.
"I don't think I saw the best of Iarfhlaith but I know from what I saw in 2012 that he's a very good footballer," he told the club's official website.
"He played a lot of last season with an injury until it became too much and he just couldn't do it any more. He's had the operation towards the end of the season and he'll come back as a big asset to us.
He added: "I'm delighted with our options in that area (left back) and in 2012 we didn't have that. This year we can be very strong with a lot of competition and players that I can deploy in a few positions.
"It's exciting and a good challenge for the guys involved," concluded Baraclough.