The National University of Ireland Maynooth has been ordered to pay €10,000 (£6,900) to a candidate who was rejected for the post of professor of sociology.
Ireland's Equality Tribunal found that Argentinian-born Ronnie Munck had suffered stress as a result of discrimination by the college when it turned down his application.
NUI Maynooth was ordered to revise its appointment procedures. The university will not appeal against the findings.
Dr Munck, who has an Irish passport through marriage, brought the case to the tribunal claiming that he was the most experienced and best-qualified candidate for the job.
The tribunal focused on the overall selection process. It recognised that direct evidence of discrimination on the grounds of race was often elusive but considered that, in this case, Dr Munck had established facts that successfully raised an inference of discrimination.
While Sean Ó Riain, the successful candidate, was more highly qualified, Dr Munck had significantly greater experience and had held the position ofhead of sociology at another university.
"It was even more disturbing that, during the course of the hearing of this claim, it was considered that it was not necessary to have retained notes or carried out individual marking of candidates," the Irish Equality Officer said at the tribunal.
In the absence of any notes of the interview, and given the comments in the summary report after the interviews, the tribunal was not satisfied that the university was able to rebut the presumption of discrimination.
It is understood that NUI Maynooth is examining the implications for selection procedures.
Dr Munck, who now works in Dublin City University, said that Irish universities could not afford to be brought into disrepute in the international arena where they now needed to compete for students and staff alike.
"Universities are not ivory towers; they are part of society; they must set an example" he said.