Financial woes saw the festival, which included a huge Princes Street cavalcade, cancelled in 2007 after a row over its police security bill.
It will now return to the city after organisers vowed to hold only a small parade in Princes Street Gardens and events at smaller venues.
Last time the festival took place, in 2006, 2000 performers drew crowds of 40,000 spectators. Organisers have this year planned for 550 performers with an audience of around 5000.
They said it would not require a police presence or a cash handout from the council.
Bob Bone, director of organiser Destination Events, said: “We’ve always had a good relationship with the police but they wanted an awful lot of money last time and we just could not afford that.
“Now we are offering a scaled-down version of what we were doing last time round. There has been a much greater willingness in the city to cooperate because the event is much smaller and we have not been asking for as much.”
Mr Bone said his company would foot the entire bill for the 2012 festival and that most of the overseas performers would be self-funded.
He added: “This year’s festival is a toe in the water to see if it’s something that might be wanted and enjoyed by people in Edinburgh.
“If it is and we can build our audience, that will give us encouragement knowing that if we do something bigger, people will come to see it.
“Then we can start thinking about increasing the size of the festival and attracting sponsorship.”
The festival will see marching bands from Andover and Palm Springs high schools in the United States travel to perform with local groups in Princes Street Gardens on Easter Sunday, April 8.
There will also be performances by the bands’ orchestras at the Reid Concert Hall and St Cuthbert’s Church on April 6 and 7.
David Reed, orchestra director at Andover High School, said about 90 of his students would make the journey.
He said: “The bands will be marching in block formation through Princes Street Gardens and stopping to perform routines which will be mainly flag-based.
“This is about the band having the chance to play and march for people who would never normally be able to watch our kids.”
Robert Ambrose, band director at Andover, added: “The students are very excited about coming.
“So many Americans are of Scottish heritage originally and there’s a sense of familiarity for them in Scotland. ”