The bakery, which has its shop on Dundas Street, will supply the city centre store with its Christmas dessert-flavoured cupcakes, which include “pear and almond crumble” and “chocolate hazelnut tart”.
Cuckoo’s owners, Vidya Sarjoo and Graham Savage, plan to use the deal with Waterstones as a springboard to open a second bakery in Edinburgh in 2013.
Sarjoo said: “Waterstones is a major shopping destination in the capital and is a place in which we felt our brand would be accessible to the type of customers we normally get in our Dundas Street store.
“It was a major bonus that we were able to launch our partnership with Waterstones just before Christmas as it is a time when it is likely to see the most footfall.
“This partnership is the first step in the Cuckoo’s Bakery expansion and is one we hope to replicate as the company gets bigger.”
Ian Webster, manager at Waterstones Princes Street, added: “We hope that our customers will enjoy having them as much as we will.”