The contract has been signed for the start of the new Luas Cross City line.
Work begins almost immediately on the 5.6 kilometre stretch from the Green line at St. Stephens Green to Broombridge connecting it with the Red Line.
40 million people a year take the Luas and this new connection will add another ten million to that number.
"We're delighted to get to this very important milestone," said acting chief executive of the Railway Procurement Agency Rory O'Connor.
"We've missed out on 10 million passengers a year for the last nine years because the lines have not been joined so this is going to be a really important project for the city."