The Department of Heritage will conduct the review, reporting its views to the OPW and the Courts Service.
Local Sinn Féin representative Pa Daly has welcomed the news, while condemning the lack of investment in court services.
"It is unfortunate that the Courts Service has been deliberately downgrading services in the courthouse in Tralee," Teachta Daly said.
"While the refusal to invest in our court building has continued for years, under successive governments this has recently accelerated with the removal of circuit court or indictable cases to Limerick.
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"That is despite efforts by local lawyers to keep services here and prevent the exodus out of the county of Gardaí, victims of crime, witnesses and representatives for weeks on end.
"The only investment in Tralee's court over the past 40 years has been a lick of paint and a kitchen for the judge's chamber.
"Plans for wheelchair access have gone no further than the wall of the lobby in the courthouse. A policy of running the court in Tralee into the ground is not acceptable.
"Everybody concerned accepts that we need an improved court building, but the correct decision and the overall good of the town and town centre must be prioritised.
"We must learn from the mistakes made in the past when, for example, some councillors voted to allow Manor West to proceed without adequate protections or supports for Tralee town centre.
"No proper plans for the existing site have been produced but with increased emphasis on the importance of town centres and preserving historic buildings, I hope that the potential for both enhancing the current building and keeping court business in its current location in Tralee town centre can be achieved."
