Armstrong will contest the number nine jersey with Wales international Rhodri Williams.
“I’m really excited to join the Dragons and embrace the opportunity to challenge myself in a new environment, playing rugby in Wales,” Armstrong said.
“The club has put together a strong, talented squad ahead of the new season and I’m eager to play a key role in helping us achieve success on the field.”
Williams is Dragons’ first-choice scrum-half and Armstrong provides a more experienced rival along with homegrown 22-year-olds Che Hope and Morgan Lloyd, plus Wales Under-20s cap Logan Franklin.
Head coach Filo Tiatia said: “Niall is a talented and driven scrum-half and we’re already enjoying having him within the environment.”
Dragons have had an extensive summer recruitment drive after finishing bottom of the URC table last season, with Armstrong their 14th senior arrival.
They have also brought in Wyn Jones, Dillon Lewis, Robert Hunt, Seb Davies, Levi Douglas, Thomas Young, Harry Beddall, Mackenzie Martin, Tinus de Beer, Jac Lloyd, Fetuli Paea, Fine Inisi and David Richards.
