Rennie, 19, rejected offers from Brisbane, Manly and Cronulla to join Souths in 2004.
At 184cm and 110kg, the Kiwi junior international is the type of young, dynamic front rower that Rabbitohs coach Paul Langmack is looking for.
"Dallas has enormous potential," said Langmack. "He's the type of skilful and aggressive giant that we need to become a more intimidating unit.
"Injuries over the last 12 months have punctuated his career, but I think he'll be a big hit with the Rabbitohs."
Former New Zealand and Warriors coach Frank Endacott rates Rennie as potentially one of the NRL's top props.
"The sky is the limit for Dallas - he possesses all the modern front rower skills," said Endacott.
"His passing and tackling is of a great standard, and he's extremely agile for a young man so big in stature.
"He thinks a lot about the game and has a great work ethic - he's an excellent pick-up for South Sydney."
In other Souths news, the club has extended the contract of second rower Luke Stuart until the end of the 2005 season and re-signed promising lower grade hooker James Storer for next year.Like