Louth County Councillors agreed to dispose of the lands to the Louth County Board of the GAA at its December meeting.
When complete, the new ground is expected to represent an investment of €8 million.
Louth Sinn Féin councillor Ruairí Ó Murchú welcomed the news.
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He said: "This is a very positive development for the GAA in Louth and I am delighted that this land on the outskirts of Dundalk will be developed for the use of Louth GAA.
"This means that Louth county teams will no longer have to cede home advantage due to lack of grounds.
"Cumann Lúthchleas Gael contributes immeasurably to our communities; indeed, in many rural communities, it is the sole driver of community activities.
"I am proud that Louth County Council has supported this project and in doing so has supported every GAA volunteer, player and enthusiast."
(CM/MH)
