The Gender Recognition Act has been passed by the Oireachtas.
It means transgender people can be fully recognised in their chosen gender.
They will be able to change the gender on their birth certificate and passport.
It also removes a clause in a previous bill which required a supporting statement from a doctor.
The decision is being welcomed by a number of groups, including the Transgender Equality Network Ireland's Broden Giambrone:
Amnesty International says it welcomes the Government's commitment to remove the requirement that applicants for legal gender recognition dissolve their civil partnerships or divorce, should the current legal challenge to the marriage equality referendum be rejected.
Colm O'Gorman of Amnesty said that while the organisation is 'heartened' that two of their major concerns with Bill had been addressed, they "remain concerned that the Act still stipulates that 16 and 17-year-olds require a court order to obtain legal recognition of their gender".
"This is an onerous process that does not meet the standard of being quick, transparent and accessible," he said.
In a statement, Minister of State Kevin Humphreys said: "During this process, it has been my privilege to meet with many representatives of the transgender community including parents and children. These conversations have informed my thinking and, I believe, are reflected in this Bill.
“This is a very significant day and not just for transgender people and their families. It is also another milestone for equality in Irish society following the resounding Yes for marriage equality in May," he added.
Michael Farrell - senior solicitor with Free Legal Advice Centres (FLAC), the organisation that represented Dr Lydia Foy during an 18-year-legal battle that helped lead to the passing of the bill - said: "for Lydia Foy, it is the end of a long drawn-out struggle for the right to be recognised in the gender in which she has lived for the last 25 years."
President Higgins is expected to sign the bill within the next seven days.
