The recent good weather means the course is playing so hard and fast that Tiger Woods reported hitting a four-iron 285 yards earlier this week, while two-time Muirfield winner Nick Faldo likened it to "a main road".
"I think it's no exaggeration to say that in my time at the R&A with direct involvement in The Open Championship, which goes back to 2000, factors have combined this year to make this the best course set-up we've ever had in that period," Dawson said.
"The course is just as we want it. It's hard, it's fast, it's in wonderful condition. The rough is just right. I think the players are all enjoying it. So factors have come together on top of Muirfield, which is a wonderful golf course in its own right, to make this the best set-up I've seen in my time, and we're absolutely delighted with it.
"The position on watering the golf course is that most evenings we are doing a minimal amount of watering to ensure that the golf course stays alive in these conditions. All we're trying to do is keep a balance between the water content that's being lost during the day and putting a little bit on at night."
Phil Mickelson has said he will not carry a driver this week due to the conditions and Tiger Woods is set to use mainly irons off the tee as he did on his way to victory at Hoylake in 2006.
"That's their choice, obviously," chairman of the championship committee Jim McArthur said. "I think part of golf is golf course management. Some people are comfortable with a driver in their hand and some others are not.
"Muirfield has often been described as a fair but tough championship test and, with the alterations which have been made since the last time The Open was here, we are confident that the course will again present a tough but fair challenge to the best golfers in the world, and a worthy champion will emerge at the finish.
"The latest weather forecast we have says it will remain mostly dry and settled for the championship, with a good deal of warm sunshine on Thursday and Friday, although cloudier conditions are expected for the weekend, with dull and misty starts possible on Saturday and Sunday."
New tees have been added on seven holes, taking the overall distance from 7,034 yards when Ernie Els won in 2002 to a par-71 of 7,192 yards.
The biggest difference is on the ninth, where a land swap with neighbours the Renaissance Club has enabled the tee to be moved back almost 50 yards, extending the par-five to 554 yards, with a new bunker added on the right of the fairway and bunkers moved closer to the green.
Dawson confirmed that drug testing would be carried out this week, under the European Tour's anti-doping policy, while the target times for rounds have been decreased in a bid to crack down on slow play.
No penalties were applied last year, although Chinese schoolboy Guan Tianlang was given a one-shot penalty for slow play during April's US Masters.
"Again we are applying a pace-of-play position stringently this year," McArthur added.
"We have slightly reduced the round time from what we had at last year. We are down to four hours 25 minutes now for the first two days, and three hours 41 minutes for the final two days. I think we are making progress here.
"I think there is a mood amongst many players nowadays to improve the pace of play as well. We're getting much more cooperation."