Dublin had previously been unsuccessful in the pre-selection stage of the competition that took place last November.
Galway will hold the title of European Capital of Culture in 2020, worth a potential €170m to the local economy, along with Rijeka in Croatia.
Heather Humphreys, the minister for arts, heritage, regional, rural and Gaeltacht affairs, said Galway now had an excellent opportunity to showcase its cultural richness.
Ms Humphreys said one of the aims of the European City of Culture initiative was to bring the people of Europe closer together and improve mutual understanding.
Before the winning bid was announced at the National Concert Hall in Dublin yesterday, she spoke about the Bastille Day attack in France.
“We can only respond to such attacks by strengthening our resolve and commitment to our culture and way of life in Europe.”
Galway.....we did it together! pic.twitter.com/WqmtBbNhbB— Galway 2020 (@galway2020) July 15, 2016
Galway Mayor Noel Larkin was delighted when Galway won the title and a prize of €1.5m.
“It is a huge day for the city and county,” he said.
The Capital of Culture has been running since 1985 — it was started by the then Greek minister of culture, Melina Mercouri.
The European Parliament and the council that governs the European Capitals of Culture Union decided that Ireland and Croatia were the two member states entitle to host the event in 2020.
All applications in Ireland were examined by a panel of ten independent experts who all have a background in arts or European affairs.
Competing cities were asked to prepare a cultural programme with a strong European dimension that must have a lasting impact and contribute to the long-term development of the city.
Limerick Chamber chief executive, Dr James Ring, said the team left nothing behind.
“The 18-month campaign ensured that the cultural candle has continued to burn bright post our 2014 designation as national capital of culture and come 2020 it will be burning even brighter,” said Dr Ring.
Bishop of Limerick, Brendan Leahy, said the theme of ‘belonging’ which was central to Limerick’s bid had struck a chord.
“Whether you are new to the city or from the families that have been here for generations or whatever your background, this is a city that is every clearly seeking to create a sense of belonging,” he said.