Engineers came up with three possible routes.
Maps of the preferred route are due for public display tomorrow at the River Island Hotel. The bypass is seen as a critical part of ongoing improvements to the Tralee/Limerick national primary road.
The need for a bypass in Castleisland as been highlighted for more than 30 years.
It is projected to be completed by 2008.
Project manager John O’Connor said the 5.3km bypass would divert about 60% of all traffic and 80% of trucks away from the town.
“As well as vastly improving traffic flow, this will also improve the safety and quality of life of people living and working in Castleisland,” he said.
Much of the traffic approaching Kerry from the Limerick and Dublin sides comes through Castleisland.
Traffic surveys indicate up to 8,000 vehicles pass through Castleisland a day.
The bypass will run to the north west of the town and link the Tralee and Limerick roads. It will go mainly through farmland and will emerge at a point just on the town side of Castleisland Golf Club.
Construction work, expected to take 18 months, is due to start in 2007.
As part of a public consultation process, plans for the three possible routes were put on display in Castleisland last year.
John O’Connor, meanwhile, said that as well as being hugely beneficial to Castleisland, the new road would be part an ongoing programme to improve Kerry’s transport links with the rest of the county.
A new road already links Castleisland and Tralee and work is due to get underway on a new 7km stretch between Castleisland and Abbeyfeale.
Meanwhile, up to E17.5m will be spent on non-national roads in Kerry this year, it was announced yesterday.
Specific allocations include E450,000 for improvements to the Castlegregory/Dingle and Castlemaine/Annascaul roads, E300,000 for the Fossa/Milltown road, E150,000 for Whitebridge, Killarney, and E70,000 for Sheen Bridge, Kenmare.