Fr James Kenny, who was appointed to the parish of Skerries, Co Dublin, last year, started taking the money after a dispute broke out between him and the parish priest.
Fr Kenny wanted to hold social evenings for parishioners but it was difficult to get the parish priest's consent for this.
He claimed he was "humiliated" by the parish priest in front of school children who were making their first confessions and instead of dealing with the conflict, he started to take coins from the church collection over a period of time.
Fr Kenny (48) of Moynalty, Kells, Co Meath, pleaded guilty to the theft of €4,000 on dates between March 31 and July 7 last year.
Garda Sergeant David Kemp told the court that concerns were raised that funds appeared to be going missing. He said CCTV was installed in the cash- holding area of the sacristy and on six separate dates, Fr Kenny was captured on camera removing coins.
He said Fr Kenny, who has no previous convictions, presented himself at the garda station by appointment and admitted he took the money when he wasn't supposed to.
Fr Kenny's solicitor explained that Fr Kenny had joined the priesthood when he left school but that he is not very assertive, which led to difficulties in his life resulting in counselling.
He said that when Fr Kenny was appointed to the parish of Skerries last year, he had a "difficult relationship with the parish priest".
"He was anxious to have a more pastoral role and wanted to hold social evenings with the parishioners in the church but found it very difficult to get the parish priest's consent to this," the solicitor said.
"There was a dispute between them and Fr Kenny felt he was being put down in front of school children during their first confession and he felt humiliated," the solicitor said.
"Rather than dealing with it in a different way, he started to take the coins and held a number of social evenings. None of it was for his own benefit," the solicitor added.
The solicitor handed in four letters from parishioners, who mentioned the social evenings.
The solicitor said Fr Kenny felt a "certain relief" when the thefts came to light.
"He didn't deal with it properly but he didn't feel what he was doing was criminal but he did know it was wrong. He is a popular priest among his parishioners," the solicitor added.
The court heard that Fr Kenny has paid the money back and that he is leaving the priesthood to pursue a career in horticulture.
"If he is left with no conviction it gives Fr Kenny the opportunity to start life again with a clean record," the solicitor said.
"He is guilty and he now accepts what he did was wrong."
Judge Michael Coughlan remarked that it was a "sad case in every respect considering the fact that a priest has special responsibilities to act appropriately at all times".
"That having been said, no lasting damage was done," said the judge, adding that from the references handed into court that Fr Kenny stands in high regard as a pastoral minister in his parish.
"The letters have persuaded me that he is a caring and popular priest. It is just an unfortunate situation for the parish and for the defendant."
He said he will apply the Probation Act and wished Fr Kenny well as he embarks on a new career.