The 18-year-old, who started his career at Watford before switching to Leyton Orient, has put pen to paper on a one-year contract at Victoria Road.
Obafemi, top scorer for Orient's youth academy in his first season with the club, was released from Brisbane Road at the end of last season.
Daggers boss Wayne Burnett told the club's official website: "I am delighted that Afolabi has signed for the Daggers.
"He's an exciting player and will bring something different to the squad.
"He's still a very young man and still learning his trade, he's worked extremely hard in pre-season and we're delighted with his progress."