The Minister for Transport, Martin Cullen, has signed an agreement with the US Secretary of Transport, Norman Mineta, which will see the phasing out of the Shannon stopover by April 2008.
The stopover will go under an open skies agreement between the EU and the US due to be finalised next week.
The transition period will begin in November of next year; during that time the number of flights having to stop in Shannon will be reduced to one in four on any scheduled route.
Also three new US destinations will be made available to Aer Lingus.
The stopover will be lifted from all cargo flights from the outset of the transition period.
The minister made the announcement in New York where he is meeting officials from the city's mass transit authority.