Potts, 18, has been with Preston since Under 14s and been a regular goalscorer.
Manager Danny Grainger said: “After our first conversation with him, his attitude to want to develop and be succesful was great to hear. I think he can come and be a success with us.”
He will link up with long-serving striker Scott Allison, who has re-signed with the club for the 2020/21 season.
Going in to his eighth campaign as a Red, Allison has scored 120 goals including 23 last season.
Allison said: “I’m delighted to have committed to the club for another season, it was a very easy decision.
“Last season was by far my most enjoyable season in football, it’s just a huge shame how it ended. I can’t wait to get back on the pitch whenever that may be and hopefully we can pick up where we left off.
“The way last season ended has left a bitter taste, but that’s also added motivation to go and do it again.”
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