Pennington, who was 19 last week, has put pen to paper on a two year deal which comes into force on October 1, 2018 after he has completed his scholarship at the University of Worcester.
It means he is contracted to Worcestershire until the end of the 2020 season and follows on from his exciting performances in the ICC Under-19 World Cup in New Zealand last month.
He is the latest in a long line of the County's Academy products to graduate onto the professional staff at Blackfinch New Road.
Pennington took the new ball for England in the World Cup and impressed with his pace and bounce.
He played in five of their six matches including the quarter-final against Australia when he returned his tournament best figures of 3-27.
Worcestershire Head Coach Kevin Sharp gave Pennington in his Second Eleven debut last summer when in his previous role as Second Eleven coach.
He said: "We have got one or two of these lads who have got great potential and Dillon can bat, he can bowl, and he fields well.
"He impressed with the Under-19s and has got pace and bounce which is a rare commodity. When the ball hits the splice, it makes it hard for the batsman.
"Dillon is an exciting talent and it's great that we have managed to secure a deal with him. I'm glad he is one of ours and not someone else's."
Academy coach Elliot Wilson, who has overseen Pennington's progress during the past few years, said: "Dillon has got great potential and to be where he is as a cricketer, considering how raw he is, is quite scary.
"As he matures and develops as a cricketer, the scope of where Dillon can go is also quite scary.
"We are all delighted for him in signing a contract and it is a reward for his efforts at the World Cup."
Pennington is a product of the County's Shropshire satellite academy which is run by the club's former paceman and current Board member, Paul Pridgeon.
He first came onto the full Academy mid-way through the 2015-2016 intake.
Pennington is delighted to put pen to paper on the contract and admits he has learnt a great deal from the Academy experience also playing second team cricket last summer before his success with England Under-19s.
He said: "The Academy has been brilliant, training three or four times a week with all the professional staff and the coaches.
"I also loved playing second team cricket, being around the pros and in that environment, but also playing against quality players.
"You learn and improve so much from playing against the better batters and realising where you have to bowl.
"My game awareness has just shot through the roof in terms of improvements. You can't bowl a slightly bad ball or it just goes for four.
"I try to hit the deck hard and maybe swing the ball a bit."