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The works will benefit five local villages in the east and west of the county.
Clare council awarded the contract to Treatment System Services Ltd (TSSL), who will construct the treatment facilities at three site.
A €7m network upgrade is already underway in the area, and nearing completion.
The latest project will be designed and built by the contractor, TSSL.
Three new treatment, transfer and outfall facilities, including a sea outfall at Quilty, will be constructed on west coast of Clare.
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The contractor will then enter a 20-year operation and maintenance period, bringing the estimated value of the contract to €9m.
The scheme will be operational by the end of 2009, and fully commissioned in early 2010.
Mayor of Clare, Madeleine Taylor Quinn, welcomed the signing of the contract.
"I would like to pay tribute to the many current, former and deceased County Councillors who have worked tirelessly to ensure that the Department would sanction this long overdue project," she said.
Mayor Taylor Quinn said that for many years the lack of adequate infrastructure had led to pressure being placed on the rural areas concerned in relation to development.
"Due to the lack of such vital infrastructure increasing numbers of people have applied to the County Council for permission to build and to provide their own septic tank and water supply.
"I believe that the completion of work on the schemes will relieve much of this pressure and provide for the rural regeneration and sustained economic development of the respective regions," she added.
(PR/JM)
