The former Ross County and Hibernian striker joins the Stephen Kenny's side ahead of the 2013 Airtricity Premier Division season
Byrne began his career at Norwich City before joining Scottish team Hibernian in 2007. The 22-year-old Dubliner had several loan spells during his time with Hibs before joining Ross County in 2011.
He was released by Ross County in December 2012 and has agreed a move to Oriel Park, where he becomes Stephen Kenny's 13th signing.
Speaking to dundalkfc.com, Byrne said that he aims to become 'an important part' of the Lilywhites team.
"Stephen has assembled a good side and I am very much looking forward to starting pre-season training with the lads," he said.
"I have gained a lot of experience but now I want to establish myself at Dundalk FC and show what I can do. My aim is to score goals and become an important part of Stephen’s team," added the striker.