The project will bring together the three existing children's hospitals - Temple Street Children's University Hospital, Our Lady's Children's Hospital, Crumlin and the National Children's Hospital, Tallaght.
There has been much controversy of the suitability of the site.
An Bord Pleanála has granted permission, subject to 17 conditions.
No major changes have been sought on the original planning application.
Minister for Health, Leo Varadkar has said receiving the phone call this morning that planning permission had been granted was the best phone call he ever received in politics.
Mr. Varadkar said it "will be the single biggest capital project in the history of Irish healthcare".
He added: "The new Children's Hospital will support regional hospitals across Ireland to ensure that services are provided as close to home as possible. Permission has also been granted for the research centre."
Chief executive Eilísh Hardiman of the Children's Hospital Group said: "This truly is a watershed day for children, young people and their families."
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