Fianna Fáil TD Donie Cassidy has been given the green light by Dublin City Council to convert the National Wax Museum into a 118-bedroom hotel.
The museum has been at the Dorset Street and Granby Row site since 1983 and is home to over 300 wax models of Ireland's celebrity and historical figures.
The Westmeath deputy's plans to convert the building into a seven-storey hotel were put on hold last year following the discovery of an 18th century church beneath it.
Mr Cassidy was asked to remove part of the brick cladding on the building and to submit a salvage plan for the 18th century materials to include the roof structure, stone decorative elements, window details and internal fittings.
A subsequent conservation report compiled for the council, however, noted that a fire in 1839 resulted in extensive 19th century reconstruction leaving little of any architectural merit.
Dublin City Council has decided to grant permission for the development on condition that the developer implement a salvage plan for 18th and 19th century materials to include the roof structure, stone decorative elements, window details and internal fittings.
Mr Cassidy was also told to omit the fourth and fifth levels of the development. Now the building will be restricted to four storeys with one penthouse level.
Noting that the remaining historical fabric of the site is concealed behind "unsightly modern screen walls" and that the building was not a protected structure, the council said the demolition of the building, including the 18th century fabric, was acceptable.
A total of five objections to the scheme were received, including a submission from the Irish Georgian Society and An Taisce.
The Wax Museum was set up by businessmen Mr Simon Kelly and Mr Paddy Dunning in 1983.
The museum is looking for a new home, according to manger Ms Kay Murray, who said the museum had its busiest year last year with more than 147,000 visitors.
Mr Cassidy also owns an 88-bedroom hotel, Cassidy's Hotel, on Cavendish Row, opposite Parnell Square in Dublin.