The country's largest maternity hospital, the National Maternity Hospital, Holles Street in Dublin is to relocate to the campus of St Vincent's University Hospital.
The long-awaited move has been confirmed by Minister for Health James Reilly.
The cost of the new development is estimated at €150m. The move is due to take place by around 2018.
The hospital will be co-located with a major adult hospital with specialist services.
Holles Street delivers around 9,500 babies a year and employs over 820 people.
It is one of the biggest maternity hospitals in Europe.
The new facility will cater for up to 10,000 births a year.
Master of the National Maternity Hospital Dr Rhona Mahony said the existing building was no longer fit for purpose.
The new building will have a high dependency unit, a neonatal intensive care unit and a special care baby unit.
Holles Street opened in 1894 and provides obstetric, gynaecology and neonatal services.
The Institute of Obstetricians and Gynaecologists has said that they welcome the move.
Spokesperson for the IOG Professor Fionnuala McAuliffe has said that: "The co-location of a maternity hospital with an acute adult hospital is in line with best international practice."
Professor McAuliffe said: "This move will give pregnant women faster access to a full range of hospital services, including coronary care and intensive care.
She said: "This is a very positive development for women and infants in Ireland."