Dahlan cited health reasons for his resignation, which was accepted on Thursday by Abbas.
However, Palestinian government officials said Abbas asked him to step down because investigators concluded Dahlan bore much of the responsibility for the humiliating defeat of Fatah-aligned forces in mid-June.
Dahlan has been heavily criticised within Abbas's Fatah faction for the failure.
He was not in Gaza when fighting broke out between the two factions. More than 100 people were killed in the conflict, while Dahlan was sidelined due to surgery on both knees.
In an interview with the Reuters news agency earlier in the month, Dahlan acknowledged mistakes and said individuals, including himself, should take responsibility for their errors.
Last month, Abbas dismissed Rashid Abu Shbak, another senior security official.
The committee investigating the security forces' failures was headed by Tayeb Abdel Rahim, a senior Abbas aide.
Investigators heard 120 hours of testimony, including from Dahlan and other senior security commanders.
Among the 60 facing trial in a military court are officers of various ranks, the official said.
Abbas has already dismissed or accepted the resignation of more than a dozen Gaza security officers.