The promising 17-year-old trained with the Gunners’ first-team last season and spent the final two months of the season with Watford.
A versatile player blessed with blistering pace, an impressive passing range and a willingness to get forward, Dennis most frequently operates as an attack-minded right-sided player.
She has also previously represented England at youth level, playing at the UEFA Women’s Under-17 Euros in the summer.
Head of Women’s Football Grace Williams said: "We're delighted to welcome Araya, who is one of the most exciting young talents in England, to the club, and we look forward to developing her and maximising her potential in south London.”
Dennis could be in line to make her Palace debut when the Eagles head to Birmingham City on Sunday (3rd September, 15:00 BST kick-off). The match will be streamed live on the FA Player.
Everyone at Palace would like to welcome Araya to south London, and wish her the very best for her career in red and blue.