The broadcaster said the sports channel will launch on Freeview on March 1 as the only premium sports channel on the free-to-air platform.
For a special introductory offer of £10.99 a month, viewers will be able to watch a number of exclusive live sports events including 46 Barclays Premiership matches, the US PGA Tour and the Bank of Scotland Premier League.
The move marks the first time Premiership football has aired on terrestrial TV since Sky first won the rights in 1992.
The move is likely to lead to loss of subscribers for BSkyB, which has used its exclusive football rights to establish a position as the dominant player in the UK pay-TV market.
Sky's premium package, which enables subscribers to watch live Premier League matches, costs around £40 a month.
Setanta will broadcast 46 Monday night and Saturday evening games, which are not available on Sky, although it will also charge a £10 once-only connection charge. However, the broadcaster said there will be no minimum contract period.
Michael O'Rourke, co-founder and joint CEO of Setanta, said: "This is an unbeatable proposition. Setanta gives you premium sports for just over a tenner, a fraction of the price of other sports subscriptions. And you don't need to subscribe to any other services: Freeview homes can simply add Setanta Sports to their Freeview channels."
BSkyB is set to face another challenge this week in the form of newly rejuvenated cable company NTL, which will relaunch as Virgin Media, following its merger with the group.