Seamus Ludlow's family had been campaigning for an independent investigation to be carried for years out after the 47-year-old unmarried forestry worker was murdered outside Dundalk in May 1976.
It was revealed today that an independent witness has come forward with information on the incident in the last two weeks.
Mr Ludlow was shot leaving a bar in Dundalk and his body was found in a lane near his home.
No one has ever been charged in connection with his murder.
A report by retired High Court judge Henry Barron said it was "a random, sectarian killing of a blameless Catholic civilian by loyalist extremists".
Solicitor for Seamus Ludlow's family, Gavin Booth, outlined the details of the new investigation: “More recently, we had a number of meetings with a number of different persons and today we can report the good news that there will now be a joined investigation both North and South into the murder of Seamus Ludlow.
“This investigation will be headed by Jon Boutcher and he will look at the actions of all those who played a part in the role and the murder of Seamus Ludlow. This includes the gardaí, the British Army, the SAS, the RUC and any unknown others, including those suspects that were let go.”
Jon Boutcher is a former British police chief constable who has been involved in a number of high-profile investigations relating to the Troubles.
In 2015, then then-Minister for Justice Frances Fitzgerald apologised to the family over the "inexcusable" handling of the Garda investigation of the killing, but refused to order a commission of inquiry.
The family had continued its campaign seeking a further investigation, north and south of the Border.
Prior to today’s announcement, local Sinn Féin TD Ruairí Ó Murchú said Mr Ludlow’s family deserves justice.
"For too long they have had justice denied. Since Seamus Ludlow was killed outside Dundalk in May 1976 we have had an absolute failure to investigate properly, we have had a family given false information and we have also had a situation where this State has absolutely failed to look into this case properly."
Prior to the announcement of the cross-Border investigation, the family said they would make their "most significant public statement in their campaign thus far".