There have been heavy falls on world stock markets with many exchanges hitting record lows and big sell offs in bank shares.
Analysts are blaming a lack of certainty about US and European rescue initiatives for the financial sector.
The ISEQ closed more than 9% lower with shares in the four main financial stocks falling sharply.
Shares in Irish Life and Permanent and Anglo Irish Bank were more than 20% lower.
US shares slid as panic gripped world markets over the financial crisis, but Wall Street staged a partial comeback in a highly volatile session.
The Dow Jones fell below the key psychological level of 10,000 for the first time since October 2004.
The blue-chip index fell as much as 800 points, but recovered to close down 340.49 (3.30%) at 9,984.89.
The Nasdaq fell 84.43 points (4.34%) to 1,862.96. The Standard & Poor's 500 lost 39.78 (3.62%) to 1,059.45.
London's FTSE tumbled nearly 8% to stand at 4,589 at the close. Again, banking stocks were hit particularly hard.
Elsewhere, the Paris CAC sank 9% to stand at 3,712, its heaviest one-day loss since its creation in 1988.
The Frankfurt DAX was down 7% to 5,387. Meanwhile, a 15% dive in Moscow forced yet another halt to Russian trading today.
