Entrepreneur John Teeling's Irish Whiskey Company has reached agreement with Diageo to buy the Great Northern Brewery site in Dundalk, Co Louth.
The two companies have reached agreement in principal on a deal that will see Diageo move production of Harp from Dundalk to its St James' Gate facility in Dublin.
IWC will then take over the Great Northern Brewery site early next year.
IWC is a new venture majority owned by John Teeling and his family. Mr Teeling was the founder of Cooley Distillery which was bought by US firm Jim Beam for €71m in 2011.
IWC will focus on supplying whiskey to private label brands. It intends to produce whiskey using some of the existing equipment at the Great Northern Brewery.
In a statement Diageo said IWC "will be making a significant investment in modifying and adapting it and adding specialised whiskey distilling equipment".
IWC plans to begin distilling late next year with the first whiskey available for delivery in late 2017.
John Teeling said Irish whiskey sales are growing rapidly, a trend IWC expects to continue. "As the industry grows segments emerge. IWC will supply segments not currently served at all or at best poorly served. Dundalk will be an efficient, low cost quality distillery," he said.
The focus will be on supplying grain whiskey to pot still distilleries while grain and malt and pot still whiskeys will be supplied as Private Label products to large retailers worldwide and as Bulk Whiskey to companies wishing to develop their own brands."
Paul Armstrong, Diageo's Supply Director at its international brewing supply division said the company will be centralising brewing at St James' Gate. "We have secured the future of brewing in Ireland well into the future. This ensures that great brands like Guinness, Smithwick's and Harp will continue to be brewed in Ireland," he said.