Green’s Dictionary of Slang

(US prison) a suit of civilian clothes issued to a prisoner upon his release.

1929		Illinois Association for Criminal Justice et al. Illinois Crime Survey 1055: [H]is gang, brothers of old acquaintances, noticed his shabby prison ‘dress-out’ suit and the misfit sweater vest, and invited him to come to their homes for a suit.
1996		E. Bunker Dog Eat Dog 50: The convict brought the hanger with his dress-out clothes. The two other men being released were already changing.