Running huge datasets with R
Although your question is not very specific so I'll try to give you some generic solutions. There are couple of things you can do here:


Check sparseMatrix from Matrix package as mentioned by @Sidhha
Try running your model in parallel using packages like snowfall, Parallel. Check this list of packages on Cran which can help you runnning your model in multicore parallel mode.
You can also try data.table package. It is quite phenomenal in speed.


Good reads:


11 Tips on How to Handle Big Data in R (and 1 Bad Pun)
Why R is slow &amp; how to improve its Performance?