The development will take place over the next three years with completion due in 2019, subject to planning permission approval.
Diageo operations director Colin O’Brien said the planned distillery would provide employment at the construction and operation stages.
Reviving the tradition
He added: “It will complement what is already the country’s most popular tourism offering, the Guinness Storehouse.
“This investment further demonstrates Diageo’s commitment to the growing vibrancy of The Liberties, one of the city’s most dynamic districts and the home of Irish whiskey during the original golden age of Irish distilling.
“We are excited that the planned distillery will help revive the proud tradition of distilling in The Liberties.”
The announcement coincides with Diageo unveiling premium blended Irish whiskey, Roe & Co.
The spirit was born in response to the company having identified a clear opportunity in Irish whiskey to drive overall category growth through premiumisation.
Exploring demands of today's consumers
Diageo Reserve Europe general manager Tanya Clarke said: “This is a wonderful project for us at Diageo, highlighting the opportunity we see to develop the premium segment of Irish whiskey and contribute to the category’s growth as it sees new investment and entrepreneurial interest.
“In crafting Roe & Co, we explored the demands of today’s consumers for more premium drinking experiences and the desire of bartenders for an adaptable, flavourful whiskey that works in both traditional and new cocktails.”
The George Roe & Co distillery extended over 17 acres on Thomas Street in Dublin and was once Ireland’s largest distillery.
As neighbours, George Roe & Co and Guinness were two of the biggest names at the heart of Dublin’s brewing and distilling quarter.
The new St James’ Gate distillery will be a stone’s throw from where the George Roe and Co distillery once was.