The boutique brand has signed a deal to transform the Grade A-listed Buchan House in St Andrew Square in to a 72-room hotel.
The multi-million pound renovation of the site will begin in the first half of 2018, ahead of its opening in 2019.
The hotel, which will house a Chez Mal bar and brasserie, is set to create around 50 jobs.
Malmaison opened its first ever hotel, the Malmaison Edinburgh Leith, in the city in 1994.
The group now operates 15 sites across the UK as part of the 34-strong Malmaison Hotel du Vin group.
The Malmaison and Hotel du Vin chains were sold by KSL Capital Partners to global hotel group Frasers Hospitality for £363m in 2015.