Coillte is to establish a non-profit entity, Coillte Nature, with specific focus on the environment and non-commercial forests.
The entity will oversee the conversion of some commercial forests into recreational forests.
In addition, it will target the delivery of new woodlands facilitating species diversity, biodiversity, and carbon sequestration, as part of the Government's forestry programme.
Coillte Nature will collaborate with other organisations through joint ventures in implementing its plans.
Coillte's Bernie Gray said: "Coillte’s focus is to drive a strong commercial performance and at the same time provide a valuable environmental and social dividend to society at large. Our decision to establish Coillte Nature fits perfectly in this regard.
"This is a very significant and timely initiative which is naturally aligned with the Government’s focus on Climate Action.
"Coillte is ideally positioned to lead the creation of new woodlands for carbon sequestration and to develop recreational forestry for the enjoyment and wellbeing of the public.
"Coillte Nature, which has been set up on a not for profit basis, will have a strong focus on carbon sequestration, species diversification, biodiversity and the development of forestry recreation activities.
"The Dublin mountains conversion project, within Coillte Nature, which we are announcing today is an excellent example of the kind of collaboration and innovation which Coillte can deliver for the benefit of the environment and our citizens."
Today's announcement was welcomed by Junior Minister Andrew Doyle.
"The launch of the Government's action plan this week has set us ambitious targets for new afforestation in the coming years and Coillte will have a key role to play in the delivery of this," Minister Doyle said.
Land and farm collaboration between young trained farmers and older farmers is delivering a 65pc increase in farm production on average, according to Macra na Feirme's 2019 Land Mobility Report published today.