Covering 10,000m 2, the square will become one of the largest paved public spaces in the city and will feature a bright 'red carpet' of resin-glass and light sticks.
Both Daniel Libeskind's new Grand Canal Theatre and the five-star Meridien Hotel will face onto the plaza, which has been earmarked as a venue for major events and festivals.
Backed by the Dublin Docklands Development Authority, the Eu8 million (£5.5 million) project will replace an existing, but smaller, space built over an underground car park at the west end of the Grand Dock.
John McLaughlin, director of architecture with Dublin's Docklands Authority, said: 'We are delighted that this project will make the public space the focus of the development, complementing the different buildings.
'The fact that it will open on to a large, non-tidal body of water will make it a unique space in Dublin - such spaces have traditionally only occurred in Mediterranean cities like Trieste and Venice.'
Schwartz has collaborated with Edinburgh's Spiers & Major Associates on the lighting which, the authority hopes, can be made interactive.
Due to start on site next month, the project is the first Irish commission for Boston and London-based Schwartz, and is expected to be completed in 2008.