The appointment, which was approved by Prime Minister Gordon Brown, is the second at the top of the Agency after new major projects director Nirmal Kotecha joined 10 weeks ago.
"In recent years, the Agency has introduced a number of innovations to improve its service to customers, and help protect our environment," said Dalton.
"I look forward to working with both staff and stakeholders to make yet more progress on both."
Dalton is an ICE fellow and ICE director general Tom Foulkes said: "It is great news that such an eminent and experienced civil engineer has been selected for this important appointment."
Dalton joins from the Department for Transport having previously worked at the Strategic Rail Authority.