Placecast to power opt-in service around local deals and discounts.
O2 has already seen huge success with its O2 More opt-in marketing service across the UK, which boasts more than six million users.
Irish consumers will now have the opportunity to approve the network's location-based marketing messages, which will provide offers from a number of brands.
The service analyses the user's age, gender, interests and location to determine appropriate offers that may include retailers or restaurants.
Eugene Mitchell, director of new business, Telefónica Ireland, which operates the O2 brand in the Irish marketplace, said: "The growth of location-based services creates great opportunities for proximity marketing. It fuels a growing expectation among consumers for tailored advertising via their mobile phones, with messages that are directly relevant to their passions.
"Customers are looking to take advantage of relevant bargains and deals and want these to be delivered in a convenient and timely manner. Our innovative new service provides a great experience for customers, connecting them with their favourite brands at a time and a place that really suits them."
According to Behaviour & Attitudes research, almost a third of mobile users would be happy to accept location-based promotions with open arms on the condition that they're relevant.
The geofencing technology, which calculates the locations of users will be provided by California-based Placecast. The firm's ShopAlerts service has seen large success in the States and can locate 268 million mobile phones, which is the equivalent of 92 per cent of consumers.
Users are able to opt out of O2's service at any time and it isn't necessary to possess a smartphone for the messages to work.
Alistair Goodman, CEO of Placecast, said: "The success over the past year that the O2 UK program has seen confirms the fact that consumers are actually very receptive to location-based mobile marketing messages, provided they have control over the types of messages they receive, and the number of messages is limited."