The 225-room five-star property will feature multiple dining and drinking outlets when it opens in 2020.
It will launch in the historic India Building’s in the city’s Old Town area, near The Royal Mile.
“My grandparents were from Edinburgh and my wife Joan is also Scottish, so the country has always held a special place in my heart,” says Branson.
“It’s an important moment for Virgin Hotels as it’s the first property in Europe (and will hopefully be joined by more in the coming years).”
Virgin Hotels describes itself as a lifestyle hospitality brand that combines ‘heartfelt service, straightforward value and a seamless, personalised hotel experience’.
The group launched in 2010 and opened its first property in Chicago in 2015.
Further sites are under construction in San Francisco, Nashville, Dallas and New York City.