The 19-year-old winger, who played against the Dons while at Tranmere Rovers earlier this season, will link up with the League One side for their game against Wolverhampton Wanderers on Saturday.
"He's someone we've watched throughout the season in the U21s at Everton and he'll bring pace, trickery and excitement," manager Karl Robinson told the club's official website.
"He also provides us with another option at the top end of the pitch, which is somewhere we are looking to improve. He did very well for Tranmere earlier this season and he is highly thought of by Roberto Martinez and the coaches at Everton.
"I'd like to thank Roberto and Everton for allowing us to get this deal done and I look forward to working with him."
Kennedy made eight appearances for Tranmere before returning to his parent club last month.