The owner of the Merchant's Arch Bar and Restaurant has been told he can extend his licensed premises into Temple Bar.
Kilkenny native Tom Doone, who owns the Wellington Quay bar, told the Circuit Civil Court that lack of space forces him to turn away dozens of tourists every day.
Circuit Court President, Mr Justice Raymond Groarke, granted a Declaratory Order for a €1m extension to the former 18th-century Tailor's Guild Hall, which overlooks Dublin's 200-year-old Ha'Penny Bridge.
The order ensures Mr Doone will be granted a drinks licence for the development if it is completed in accordance with planning permissions.
Constance Cassidy, counsel for the bar, said the property would be extended at ground and first-floor levels to accommodate another 90 diners.
Ms Cassidy told the court that when Mr Doone bought the property in 2006, it was almost derelict.
He subsequently spent €1.3m refurbishing it.
The property, built over brick vaults, was originally constructed by permission of the Wide Street Commissioners.
The guild hall was built for the Guild of Merchant Tailors. The guild, which was inaugurated in 1418, was disbanded in 1841.
In 1873, the building became a Protestant Boys' School and was later used as a shirt factory until its closure in 1993.
It remained empty until it was turned into a licensed pub and restaurant by Mr Doone 11 years ago.
Architect Frank Kenny, of Kenny Kane Associates, said the protected structure contained a stone corkscrew staircase that remained a major feature of the building.
Judge Groarke, who granted the Declaratory Order, was told that the building was a major heritage asset on the Dublin tourism trail.
It spans the famous Merchant's Arch which maintains an important pedestrian link between Dame Street via Temple Bar and Henry Street on the north side of the River Liffey via the Ha'Penny Bridge.
Mr Doone told Judge Groarke that the bar catered for daytime and evening tour groups, most of which ordered food.
He said work would begin early in the new year on the extension.