Lisa Smith is currently being detained in Syria where she has been accused of being a member of the extremist group.
The Irish national from County Louth was previously a member of the Irish Defence Forces before she converted to Islam and emigrated.
As an Irish citizen, the 37-year-old "will have the right to return to Ireland as will her child, who is an Irish citizen," Taoiseach Leo Varadkar said.
He added: "I know the authorities there will want to interrogate her to see if she has been involved in any crimes there. But it's very possible that she was never a combatant.
"We really need to get to the bottom of the facts here, carry out a security assessment to see if the Syrian authorities want to carry out a prosecution or not. But ultimately this is an Irish citizen and we don't believe that removing an Irish citizen's citizenship from her or her child and rendering her stateless would be either the right or compassionate thing to do."
Mr Varadkar stressed that Ms Smith's potential return would not be "as simple as coming here and proceeding as if nothing had happened".
He said: "There will need to be an interrogation by the authorities [in Syria]. There may need to be a prosecution there. And we'll make sure that if she returns to Ireland, she isn't a threat to anybody here either."
Carol Duffy, who helped Lisa Smith convert to Islam nine years ago, told the RTE broadcaster that she believed the 37-year-old had been brainwashed.
"People are judging her now from what they see but the Lisa Smith I knew was a genuine, nice girl.," she said. "She was very funny and very approachable and from a nice family. I think what has happened to Lisa is a level of brainwashing that we will never be able to comprehend. I think she was promised a great life and I think she believed them. She is very vulnerable and is guilty of being naive."
Asked whether she think Ms Smith should be allowed to return to Ireland, Ms Duffy said: "I was very conflicted by all of this because in one way I'm very adamant that anyone who gets involved in that kind of carry on needs to be punished. The other thing is we have no proof she has done anything.
"The Lisa I knew was not confrontational, (she) would never physically hurt anyone. The idea that she would be over there doing something? No, I don't believe she lifted a gun and killed anyone. I don't even believe she was sympathising with them, I think she was looking for something in life and it didn't turn out that way."
Mr Vardakar's comments on the case come as debate in the UK rages over the status of Shamima Begum, who travelled to Syria in 2015 and married an Isis fighter shortly afterwards.
The British government has stripped the teenager of her citizenship over her actions.
A lawyer representing her family has written to the Home Office, asking the department to show the teenager "mercy" by reinstating her British citizenship.
Additional reporting by agencies
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