A land deal worth €29.9 million for the new Mountjoy Prison site has been signed.
The new site for the prison is on 150 acres in Thorntown in north Co Dublin.
Both the male and female prisons on Dublin's North Circular Road will be closed and a new step-down complex with different grades of security will be built. The Government has said it would be too costly to renovate the old prisons.
The new prison will be built as part of a public private partnership.
Plans have yet to be drawn up and the planning process will be conducted in accordance with the Local Government Planning and Development Act. Precise details of the plans will not be displayed for security reasons.
The Prison Service says the new women's prison will replicate the existing Dochas Centre. It also says it will listen to the concerns of local residents and endeavour to take them into account when building the jail.
The new prison is due to be operational in 2008.
