The exercise follows a number of recent attacks in London and Manchester.
Gardaí responded to three potential scenarios - stabbings, hostage-taking and a car being driven at pedestrians - echoing real-life events in London.
Irish officers are not routinely armed but it has been announced that 10 new armed-support units are being set up.
According to Irish broadcaster RTÉ, the new units will be established in towns and cities outside Dublin to deal with the threat from terrorism and organised crime.
Gardaí also said that it has increased its armed-response capability in Dublin by a third to deal with the threat of gang warfare and potential terrorism.
The head of the force, Garda Commissioner Nóirín O'Sullivan, said 24-hour armed police cover will be available across the Republic of Ireland from the end of the year.
She was speaking in Dublin as her officers practiced their response to dealing with multiple attacks.
Commissioner O'Sullivan added: "We're measuring all the response times so I'm very confident that we have the response capability.
"I'm very confident, as we saw simulated here today, that officers, including our uniform members, know precisely what to do if something does happen."
The training exercise involved members of the Garda Emergency Response Unit and the Armed Support Unit.
Staff from Iarnród Éireann (Irish Rail) also played a part as one of the simulated attacks involved a car being driven at a pedestrian at Spencer Dock rail station.
Two actors, armed with a knife and gun, simulated stabbing and attacking passers-by and commuters at the train station before taking hostages.
In the exercise, Irish police simulated arresting one of the attackers and shooting the other one dead.
The training exercise had been planned since April and followed a series of similar exercises involving other emergency services, including ambulance and fire-fighting staff.
A counter-terrorism training exercise has taken place in Dublin to test the responsiveness of Gardaí (Irish police) in the event of a real attack.