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Archbishop of Dublin Dr Diarmuid Martin has agreed to be the patron of the new school, which will operate alongside another special school, Scoil Eoin.
There is a longer-term plan of establishing a single campus for special education in the coming years.
Ms Madigan said she was delighted to have secured agreement to open the new special school.
“This is a much-needed development which will help to meet the demand for special school places in the area. As Minister of State for special education, I am determined to support students and families in securing school places where they are needed....
She said there has been a shortage of special school places in the south Dublin area, and many students who should have a special school place were unable to secure one….
For a number of years campaigners in the south Dublin area have been calling for additional special class places and a special school to help meet the needs of children with additional needs. They say the shortage of places is forcing many children to avail of home tuition or to travel long distances across the city to access school places.
Margaret Lowndes and Helen Holmes, lead organisers of the D12 campaign, it was "fantastic to have Ministers uphold the constitutional rights of our children."
" We are over the moon at the announcement. We have campaigned for two years tirelessly and relentlessly to ensure the educational needs of the many families in Dublin 12 and across south Dublin are met . Today we can say we have been heard," they said, in a statement. …
In a statement, the department said it was monitoring the availability of places for students with special needs throughout the country as a priority issue, and would continue to work with relevant stakeholders.
The department works with the National Council for Special Education which has responsibility for working with families and schools and for the provision and co-ordination of an adequate number of specialist educational places to meet local demand.
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