O'Daly was re-arrested in Dublin in August 1924, and interned in Kilmainham Gaol.[2]
In the June 1927 general election, O'Daly was elected as a Sinn Féin TD for Mayo North, and was re-elected in the September 1927 election. He abstained from taking his seat in the Dáil, in accordance with Sinn Féin policy at the time. He did, however, take part in debates in Sinn Féin's alternative parliament, Dáil Éireann, in Dublin.[2]
O'Daly died from pneumonia in Dublin on 23 March 1931, at the age of 57.[2] He is buried in Kilmaclasser (Killeenadeema) cemetery in County Mayo.[2]