Those attending will have to undergo rapid testing and social distancing will be reduced to one metre.
It will be the first big music festival in almost 16 months.
Hosted by Irish Museum of Modern Art (IMMA), it will take place at the Royal Hospital Kilmainham, Dublin, in conjunction with MCD Productions on Saturday July 3.
The pilot event will include Gavin James, Lyra, Denise Chaila, Wild Youth, Sharon Shannon and Wyvern Lingo performing full sets.
The show will be hosted by The 2 Johnnies.
Up to 500 frontline healthcare workers and their friends will receive a reserve allocation of tickets.
Catherine Martin, Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, said: “As you know I am taking a cautious but steady approach to the reopening of the live music.
“Keeping everyone safe is the primary consideration for this Government.
“To advance trials the festival on July 3 will have 3,500 fans. Social distancing will be reduced to one metre and I am now also introducing rapid testing for concert-goers and staff.
“The purpose of these events is to build the road back to the safe and full recovery of live music and sporting events and establish confidence in the guidance and event management protocols developed for the sector.
“The use of antigen tests is to help consider the logistics as a means to gaining entry to live events as the sector reopens.
“I am delighted to confirm that we will be joined by 500 frontline healthcare workers and their friends who will receive a reserve allocation of tickets as a special thank you.
“I am determined to see live music and the arts recover and reopen and this is another step in the right direction.”
The music festival is one of a series of pilot cultural and sporting events taking place in June and July.
Annie Fletcher, director of IMMA, said: “It has been inspirational to see the public initiatives planned for this summer by the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media which herald a new future for us all as we begin to imagine a post-pandemic world.
“As the Irish Museum of Modern Art, we are a centre of innovation.
“Over the past year, we have seen just how important the grounds and outdoor programme has been to our visitors, particularly our local community in Dublin 8.
“We are delighted to collaborate on this pioneering event because at the heart of everything, IMMA aspires to be a place where creative culture can be shared by all.”
Meanwhile, a further 294 cases of Covid-19 were confirmed in Ireland on Tuesday evening by the Department of Health.
There were 39 people with the virus in hospital on Tuesday evening including 13 people in ICU.
The department said case numbers may change due to future data review, validation and update.