Based on a detailed analysis of nonlinear field equations of the SU(2) Yang-Mills-Higgs system, we obtain the effective field theory describing low-energy interaction of BPS dyons and massless particles (i.e., photons and Higgs particles). Our effective theory manifests electromagnetic duality and spontaneously broken scale symmetry, and reproduces the multimonopole moduli space dynamics of Manton in a suitable limit. Also given is a generalization of our approach to the case of BPS dyons in a gauge theory with an arbitrary gauge group that is maximally broken to U(1) k .