The investment plan, which is around 10 billion euros more than economists expected, will include additional light rail routes and new metro lines for the capital Dublin, and new commuter rail services for the country's larger cities.
Around 26 billion euros will be funded directly from the exchequer, with some 8 billion provided via Public Private Partnerships, the government said in a statement.
Finance Minister Brian Cowen said investment in Ireland's transport systems - which have come under increasing strain over more than a decade of economic success - was crucial.
"Top class infrastructure is vital to Ireland's future competitiveness ... Unless we make further improvements our competitiveness will be eroded," he said.
The government has already committed to spend just under five percent of gross national product (GNP) on capital projects - equivalent to around six billion euros a year.
Cowen said there would be flexibility to hike investment above this level in particular years to accommodate the transport plan but that "this would be manageable".
Surging economic growth over the past decade has exposed severe shortcomings in Ireland's outmoded transport networks as thousands of immigrants and returning Irish nationals flooded into the country in search of jobs.
Dublin in particular has struggled to keep up with its rapidly swelling population, with daily traffic gridlock increasingly becoming a barrier to business.
Prime Minister Bertie Ahern hailed the plan as signalling a new era for transport in Ireland.
"We need and deserve a first-class transport system," he said. "We have all worked to generate the resources, now we must invest to continue to improve the lives of everybody."
The strategy will also provide for a new road route connecting Donegal in north-west Ireland to the cities of Galway, Limerick, Cork and Waterford in the south of the country.
A metro line, due to be in place by 2012, will offer a 17-minute connection from Dublin city centre to the country's main international airport.