He has been tipped by the video streaming site to be one of ten emerging artists who are destined for big success in 2019.
Kennedy said it was "amazing" to be named alongside artists like Mahalia, Octavian and Grace Carter.
The Dublin-born musician, who is still in his 20s, rose to stardom on Spotify with his acoustic sets.
He recently released an EP in collaboration with hip-hop producer Mike Dean, entitled ‘Mike Dean Presents: Dermot Kennedy’.
"This feels like such a good way to end an amazing year," he said of being 'One to Watch'.
"Thank you so much to YouTube Music for the inclusion on this list.
YouTube has been so helpful for me to go from an Irish busker and musician to reaching a global stage and having so many people hear my music and see my videos.
"I’m currently working on my debut album, so I really look forward to sharing that with everyone next year.”
Kennedy was the only Irish artist to appear on the list, with the nine others all British.
He will appear at Dublin's Olympia Theatre for four shows next May as part of a global tour.
YouTube's 'One to Watch' list 2019:
- Mahalia
- Octavian
- Grace Carter
- Kojey Radical
- Sam Fender
- Slowthai
- L Devine
- Dermot Kennedy
- Samm Henshaw
- Jade Bird
Digital Desk
