Wilkie House on the Cowgate, which has stood empty for more than three years, will reopen as Stramash next month after a £500,000 facelift.
Known previously as Faith and the Sin Club and Lounge, the converted church will feature performances from well-known bands such as Big Country.
The 900-capacity venue will be operated by Bruce Taverns which runs nightspots across the city including The Fiddler’s Arms, The Royal Mile Tavern, The Globe Sports Bar, The Mash House and Whistlebinkies.
Bosses said Stramsash would fill a gap left in the live music scene by the closure of the Picture House on Lothian Road, which is set to be transformed into a Wetherspoon pub.
Operations manager Simon Rankin said: “We have been inspired by the success of Whistlebinkies but this will be a bigger venue with a bigger budget.
“The nightclub scene is dying off and people are demanding more live entertainment. The older crowd, particularly, like to spend money on entertainment.”
Stramash will be on two floors with a large stage, three bars and giant TV screen showing live sports events such as the Rugby World Cup.
John Richardson, owner of Ripping Records on South Bridge, said the venture would help secure the Cowgate’s reputation as a live music destination. He said: “We have been involved with live music for 40 years and we like anything that helps live music in the town.
“Since the Picture House closed there is definitely room for another venue and it’s quite nice to see it in the Cowgate near The Liquid Room and La Belle Angele. It will possibly lead to a music hub area back in the Old Town.
“I think it’s a great thing for the town and the fact that all these places are together will attract people to the area.
“It will be known as the area to come if you want to see live music, particularly with other places like Bannermans, The Jazz Bar and Whistlebinkies.”
Stramsash, which will be open from 7pm through to 3am, will have live music every night.
Most of the shows will be free, though managers may charge for some of the big-name acts which they hope to host at least once a month.
Stramash will open on Thursday, September 17 with performances from teggae band Sea Bass Kid, blues group Safehouse and Irish/Scottish folk group Mad Ferret. Big Country are set to perform on Burns Night in January.