Planning permission has been granted to build a new Central Mental Hospital in the campus of St Ita's Hospital Portrane in north Dublin.
The existing outdated hospital in Dundrum in the south of the city has been long condemned by mental health inspectors.
An Bord Pleanála gave the go-ahead to build:
The aim is for the new facility to become "operational in 2018", according to Health Minister Leo Varadkar.
He said that as part of this project the design work would be progressed for three 30-bed Intensive Care Rehabilitation Units (ICRU) in Cork, Galway and Portrane.
A fourth ICRU is planned for an existing facility in Mullingar.
Social Care Minster Kathleen Lynch said: "For the past four years we have been playing catch-up in Ireland in terms of the funding and facilities provided for mental health services."
Previously a new site for the hospital was planned for Thornton Hall, St Margaret's, Co Dublin, beside a proposed relocation for Mountjoy Prison, sparking major concern among families of the mentally ill who felt it was the wrong place for a hospital.