Flanagan will become part of St George Illawarra's coaching staff as an NRL assistant coach in late December.
The club released a statement on Wednesday to say it had "exercised due diligence throughout the lengthy appointment process of Flanagan in consideration of his 2018 NRL coaching deregistration".
The former premiership-winning Sharks mentor will join the Dragons on a one-year deal and the NRL has informed the club that he can begin his role with the club next month.
"Shane will be a valuable asset to the Dragons' endeavours in 2020. His success has been proven time and time again over many years and we're glad to have him on board," coach Paul McGregor said.
Former Dragons halfback Mathew Head has also been confirmed to return as their Canterbury Cup NSW coach in 2020.