A strong ball carrier with the ability to break tackles, Jones was named in the Wales Under 20 squad for the Junior World Championship in South Africa in 2012. He followed up that selection a year later with a place in the Wales Under 20 squad for the 2013 Six Nations.
Davies said: "Ieuan has been a successful member of the Wales Under 20 set-up and is a real talent in the regional game. He is a strong young No. 8 and big ball carrier who will add both talent and depth to our squad as we look to next year and beyond.
"Ieuan has massive potential for us and so we are excited to have him join the Blues from next season."
On a new challenge at the Blues, Jones said: "I'm looking forward to the opportunity and becoming part of an exciting and talented squad at the Arms Park.
"I would like to thank everyone at the Dragons for their support and I will be giving my all for the region for the rest of this season before I make the switch to Blues."
In other news, 24-year-old Dacey has extended his stay in the capital after a number of impressive performances so far this season. The hooker, currently second in the RaboDirect PRO12 try scoring charts with four tries in eight games, has signed a new contract to remain at the Arms Park until at least 2017.
"Kristian has the potential to play for Wales in time and so we are very pleased he has committed his future to the Blues," said Davies.
"Over the last 18 months he has overcome his injury problems and that has really benefitted his development. He has really started to develop at pace and he is a fantastic talent with the right attitude and ability to go all the way.
"We always want to keep our best young players at the Blues and Kristian's signature is the latest part of that long-term plan."
Dacey added: "It's been a fantastic season for me and I can now look forward to my future. I've come through the system here, played alongside my team-mates for years and always wanted to stay.
"I'm learning every time I play and my consistency is getting better now I'm putting games together. I've featured in eight of the last 10 games and feel I've got better with every game.
"Ultimately my ambition is to play international rugby and get even better. The Blues is the right environment for me to achieve those aims. The Blues want to keep the best young players together and push forward as one."