The award represents a major triumph for the 300-strong population who saw their town go one step
further after finishing second overall in the annual Super Valu Tidy Towns competition last year.
It is the first time in the 44-year history of the competition that the overall title has been won by an entrant from Co Laois.
Castletown, situated just off the main N7 Dublin-Limerick road between Portlaoise and Roscrea, beat competition from over 700 towns and villages from all 26 counties in the Republic.
It was also named as Ireland's Tidiest Village a category which it won for the second consecutive year.
Fianna Fáil Laois TD Seán Fleming, accepted the top prize of a 13,000 cheque and perpetual trophy for Castletown in his role as chairman of the village's Tidy Towns committee.
He claimed Castletown's secret for success was the involvement of the whole community in keeping the village clean. "Everybody knows what is required to do without the need to hold formal meetings," he said.
He added: "We're hoping this will become a double celebration as the local hurling team are in the Laois county final next Sunday."
Other major winners in this year's competition included Lismore, Co Waterford, which became Ireland's
Tidiest Small Town, and Ennis, Co Clare, named Ireland's Tidiest Large Town for the second year in a row.
Other gold medal winners were Keadue, Co Roscommon; Rathbarry, Co Cork; Newtowncashel, Co Longford; Kenmare, Co Kerry; Clonakilty, Co Cork, Westport, Co Mayo and Killarney, Co Kerry.
Best new entry winners included Ballymurphy, Co Carlow; Summerhill, Co Meath, Santry, Dublin; and Ballbofey/Stranorlar, Co Donegal.
Junior Environment Minister Pat 'The Cope' Gallagher, who presented the awards at a ceremony in Dublin Castle yesterday, praised the hard work done by all communities around the country in preparation for the competition and he claimed the recently-introduced tax on plastic shopping bags should also help all Tidy Towns committees to improve their local environment.
Competitors are marked out of a total of 300 in various categories, including buildings, landscaping, litter control, roads and general impression.
The Co Meath village of Killyon had the dubious honour of receiving the lowest score of all Tidy Town entrants with 117 points, compared to Castletown's winning total of 267 points.