Property developer Grosvenor has sold part of the site to Queensgate Hotels, which plans to operate the hotel under the Hampton by Hilton banner.
The site has an existing hotel planning consent from Edinburgh City Council. It is due to open in summer 2017.
Grosvenor was recently granted planning consent for up to 400 new homes beside the hotel site in Fountainbridge.
There are 250 homes for sale, affordable homes, serviced apartments, private rented homes and two student residences already at the site.
Robin Blacklock, planning and development director Scotland for Grosvenor Britain and Ireland, said: "This marks another milestone in the transformation of Fountainbridge.
"The hotel will benefit from close proximity to all of the amenities of the central city and will bring further jobs and vibrancy to the area."
A 228-room hotel is planned for the Fountainbridge regeneration scheme in Edinburgh.