The 210-room, 12 storey project will include a bar, lounge and restaurant space boasting 360 degree panoramic views over the city.
It will form the centrepiece of the new £850m Edinburgh St James development, which is set to include 850,000 sq.ft of retail space, 30 restaurants, up to 250 new homes, and a multi-screen cinema.
Construction is set to begin in early 2016, to be completed in 2020.
Martin Perry, director of development at TH Real Estate - which is behind the project - said he was ‘thrilled’ the council had approved the hotel.
“The building will be the centrepiece of Edinburgh St James and will reinforce the city’s position as an international destination,” he said.
“The hotel’s iconic design has already generated interest from global hotel operators and today’s decision to approve our proposals takes us one step closer to starting work on-site next year and to delivering the development.”
Architecture firm Jestico + Whiles designed the hotel as a bundle of 'coiled ribbons' to create a 'free-flowing and bold' building.
Last week councillors faced calls from planning officials to reject the proposals, who argued that the hotel would ‘damage’ the city skyline and obscure key views, the Edinburgh Evening News reported.
Concerns were also raised over the hotel’s bronze stainless steel coating which planners feared could be ‘too shiny and reflective’.
Jestico + Whiles maintains that the design is sympathetic to Edinburgh’s status as a UNESCO World Heritage Site.