McNiff came through the youth set-up at the Rock and starred for the first-team last season in the heart of the Sons defence.
The 21-year-old was rewarded with a two year contract in June however since the arrival of new manager, Ian Murray, McNiff has yet to feature for the team.
Chapman explained: "Hopefully this wee loan spell can get him back on track and I will do everything I can to help Martin and hopefully next season he will be back in the first team at Dumbarton.
"Martin is a great guy, he is full of energy and can cover a few areas which is what we need at Annan."
Weather permitting McNiff could make his Annan debut tomorrow against Peterhead.