Consider whether you really need all this data explicitly, or can the matrix be sparse? There is good support in R (see Matrix package for e.g.) for sparse matrices.
Keep all other processes and objects in R to a minimum when you need to make objects of this size. Use gc() to clear now unused memory, or, better only create the object you need in one session.
If the above cannot help, get a 64-bit machine with as much RAM as you can afford, and install 64-bit R.
If you cannot do that there are many online services for remote computing.
If you cannot do that the memory-mapping tools like package ff (or bigmemory as Sascha mentions) will help you build a new solution. In my limited experience ff is the more advanced package, but you should read the High Performance Computing topic on CRAN Task Views.