Energy minister Pat Rabitte gave his consent for the two state-supported companies to form the joint venture that will include biomass and wind power business.
The wind power division will be responsible for two Coillte wind projects and will look at expanding in to the sector in the future.
The move is being described as a partial merger of the two organisations. There has been a long consultation process, which resulted in the government allowing both companies to continue with their core businesses but to join up on overlapping operations.
The joint venture will also focus on improving the country's eco-tourism potential.
Coillte primarily operates in the commercial forestry sector, while utility Bord na Móna is focused on peat harvesting in Ireland but has expanded its operations to renewable energy. It developed the 40MW Bruckana wind farm in Tipperary.