The deal allows the company, who produce the Hershey's Kisses brand, to enter the rapidly expanding organic chocolate market and comes as the chocolate maker was forced to lower its yearly sales and earnings forecast following disappointing results.
To recoup lost sales, Hershey is hoping to tap into the growing trend towards ethical consumerism and capitalise on consumer concerns over the economic and environmental issues surrounding cocoa production.
Hershey president Richard H Lenny said: "This business complements our premium chocolate growth platform and clearly positions Hershey as a key player within the high growth, on trend organic market.
"Organic chocolate products are experiencing dramatic growth as consumers continue to trade up for indulgent, high-quality products."
Dagoba produces organic dark chocolate products such as Cacao Nibs and an Elixir range of cacao tinctures which claim to increase energy levels and contain antioxidants.
The company source organic cocoa from Costa Rica, Ecuador, the Dominican Republic, Madagascar and Peru.
Dagoba chief executive officer Frederick Schilling said: "This partnership will enable us to continue creating the world's most exquisite chocolate and make it available to a much broader consumer base."
According to market research group Leatherhead International, Hershey, who have a licence to sell Cadbury products in the US, is the fifth largest confectionery company in the world with a turnover last year of $4.83bn (€3.8bn).
The company owns the largest chocolate market share in the US with around 40 per cent and holds 11 per cent of the global market.
In its third quarter results released yesterday, Hershey noted a 3.3 per cent increase in sales - primarily driven by the dark and seasonal chocolate sectors - but admitted that results for the period had been below expectations.