The new year will bring hope, possibility and confidence to the people of Ireland, Taoiseach Enda Kenny has said.
As the country marked the beginning of its presidency of the European Union, Mr Kenny insisted stronger relations with member states would lead to a richer and more sustainable future.
"The Irish presidency in 2013 will be about three crucial words: stability, jobs and growth," Mr Kenny said.
"There are real actions to back up those three words. We will be in the business of solution, a recovery country, driving recovery in Europe."
The Taoiseach was joined by Tanaiste Eamon Gilmore and Minister of State for European Affairs Lucinda Creighton at a special flag-raising ceremony to mark the beginning of Ireland's six-month term. The Irish tricolour was raised with the EU flag at Dublin Castle following a military display and music from school choirs.
As well as marking the country's seventh presidential term, the ceremony was also held to honour the incoming European Year of Citizens and 40 years since Ireland entered the EU in 1973.
"Let this presidency and the new year, this European year of the citizen, bring new hope, new possibility and new confidence to our peoples," the Taoiseach said. "And above all, may it find that, together, this family of Europeans, we are making a richer and more sustainable future for all our peoples."
Mr Gilmore said Ireland would once again become a success story throughout Europe during its six months as president.
And before announcing the release of 40 balloons to mark 40 years of EU membership, Ms Creighton insisted this would be a "no frills presidency".
Ireland last held office in 2004 - as the Celtic Tiger was beginning to roar. The Minister of State, who has overseen preparations for the new term, promised to keep costs as low as possible. Ireland's last presidency cost the state an estimated 110 million euro. But Ms Creighton said she expects a price tag of about 60 million euro this time round.