Powell returns to the RaboDirect PRO12 after a four-year absence, in which time he has played for London Wasps, Sale Sharks and most recently rugby league outfit Wigan Warriors.
The 32-year-old - who started his career at Newport RFC - has not taken to the field since September after undergoing neck surgery, but neither his injury history nor age has deterred Jones from snapping up the forward.
And Jones has hinted a longer deal will be on the cards should Powell prove his worth for the Dragons next season.
"Andy has signed a one-year deal but I believe we can get a couple of really good seasons out of him," Jones told the South West Argus.
"If he works hard, which I am sure he will because he is already chomping at the bit, then he will be a really big asset for the region.
"There is plenty of rugby left in Andy and he can become a regular in the team because he has always been a handful for the teams that I have coached against him."
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