The retail giant will move its Edinburgh customer service centre to new state-of-the-art premises in the capital, making way for the additional staff dedicated to research and development at the Waverley Gate site.
The new roles will focus on projects such as developing new advertising technology and improving personalised shopping recommendations.
Amazon currently has more than 2,500 employees in Scotland across its development centre and customer service sites in Edinburgh, fulfilment centres in Dunfermline and Gourock, Prime Now site in Glasgow, and delivery stations in Dundee and Motherwell.
Graeme Smith, MD of Amazon Development Centre Scotland, said: “Edinburgh was Amazon’s first research and development centre outside of North America and it has a well-earnt reputation as a global centre for innovation, software engineering and machine learning.
“The new roles are Silicon Valley jobs right here in the heart of Scotland and will join teams working on large-scale projects using cutting-edge technology, which helps benefit hundreds of millions of Amazon customers around the world.
“Scotland, and Edinburgh in particular, are home to some of Europe’s most exciting start-ups, so it is fantastic we are able to expand our presence here.”
Economy secretary Derek Mackay called the news “welcome, additional investment”. He added: “This expansion will provide capacity for 250 new, high-skilled roles and shows the level of talent in the Scottish workforce.
“The Scottish Government has an ambitious economic strategy to create the right environment for job growth.
“This includes delivering enhanced physical and digital infrastructure, core skills and increased innovation and use of technologies in key industries.”
Amazon also announced plans to open its first UK corporate office outside London with a new site set to launch in Manchester next year.
The company said its expansion plans show its commitment to the UK, as it expects to create 2,500 jobs across the country in 2018, taking its total workforce to more than 27,500 nationwide.
Amazon hit headlines at the start of the month by announcing it would up its minimum wage for all UK workers outside of London to £9.50 an hour, a raise of 18.8 per cent.
Meanwhile, Filipino fast food chain Jollibee revealed it will create up to 1,500 jobs in the UK by 2023 as part of a multi-million-dollar expansion plan.
The restaurant, known for its fried chicken and sweet spaghetti, opens its first UK store in London on 20 October and announced plans to launch 25 stores in the UK over the next five years.