Sir Terry said that the new 85 million expansion plans at the Edinburgh International Conference Centre treated the original building with contempt.
Sir Terry said: "They are removing its distinctiveness. It is a round shape but they are sticking a big square bit on the side."
He added: "This insensitive disregard for the building and for all that was agreed with the original Exchange masterplanner must not be permitted in its present form."
Speaking a day before he departs his role as the city's "design champion", he also urged the city council and Scottish Government to speed up plans to improve Princes Street.
The EICC today shrugged off the criticism of its scheme, saying: "Farrell's delivered a great design to our brief for the original building and we are equally satisfied with the scheme designed by BDP."
The scheme will see a new underground atrium built below an eight-storey office block.