The film actor is taking on the role of a ruthless ex-pat known as 'The White Man' in the new series, which sees fan favourite Tony Hutchinson (Nick Pickard) have an epic adventure in Spain and Morocco.
Dyer's storyline begins when Tony agrees to carry out a dodgy deal for the village's newest bad boy Trevor Royle (Greg Wood).
As Tony takes up the job, he has no idea that he is about to fall foul of The White Man.
When the deal goes horribly wrong, a nightmare ensues which sees Tony, his brother Dom (John Pickard) and his old friends Finn (James Redmond) and Kurt (Jeremy Edwards) all get caught up in a world of high-stakes poker, Russian roulette and kidnapping - with The White Man as an unrelenting adversary.
Show bosses have promised that Dyer will bring "plenty of menacing drama to his enigmatic character".
Hollyoaks Later producer Jane Steventon commented: "I'm thrilled that we have brought together such an amazing cast for this year's Later and with the addition of Danny Dyer, the adventures can really kick off."
The new series of Hollyoaks Later will be screened in the autumn on E4.
> 'Hollyoaks Later' returning for sixth series with former stars
> Read more 'Hollyoaks' spoilers and news
Digital Spy Soap Scoop video - press play below to watch Amie Parker-Williams reveal gossip on a Coronation Street race row, Beale crisis in EastEnders, more Rhona twists in Emmerdale and trouble for the teens in Hollyoaks.