Fáilte Ireland is to invest €15.5m to boost the attractiveness and tourism appeal of up to 62 towns across the country.
This will be done through local authorities as part of work to drive a better regional spread of overseas and domestic visitors and spend.
Through the scheme, every local authority in the country will be able to bid for funding of between €250,000 and €500,000 to develop up to two towns in their area which have the potential to become a 'destination town' for tourists.
The scheme will provide funding to councils to enhance public spaces such as squares, streetscapes and markets.
This could include spaces for food and craft markets, areas for town centre events, public art displays - as well as orientation and signage to help visitors explore a town's local heritage.
Fáilte Ireland has said research has consistently showed that attractive towns and cities are key motivators for overseas holidaymakers coming to Ireland.
The 'destination towns' will need to demonstrate their capacity and appeal to attract more international visitors to stay overnight - a key driver of spend.
Councils will be expected to identify towns that have at least one visitor attraction of scale that can drive tourism demand, a range of things to see and do for two days and a selection of accommodation.
— Fáilte Ireland (@Failte_Ireland) March 27, 2019
A range of food offerings to meet the visitor needs will also be required.
Minister of State for Tourism Brendan Griffin said: "This scheme is a great opportunity for towns which aren't fully active in the tourism industry to look at how their local economy can benefit from increased tourism activity as well as the physical development the scheme will bring.
"I am pleased to see Fáilte Ireland working closely with local communities, councils and businesses to create a better regional spread of visitors and revenue, and today's funding announcement marks a real step-change in the way we look at towns as drivers of tourism."
To help communities and local authorities with their applications, Fáilte Ireland has set up Development Guidelines for Tourism Destination Towns to provide a framework for applications.
Fáilte Ireland's CEO Paul Kelly added: "The importance of tourism as an economic driver and source of employment cannot be underestimated. It is a unique industry in terms of its ability to spur local job creation and sustain rural communities.
"That is why, at Fáilte Ireland, everything we do is underpinned by two strategic pillars - spreading tourism across a wider geography and creating a broader tourism season so businesses can remain open for longer."
The scheme will officially open in April for applications and will close in September.