There are now only 3100 spaces in the Capital, compared with nearly 3500 in 2000, a fall of about ten per cent.
That figure is mirrored in the other three Lothians local authorities as health chiefs struggle to move elderly people out of hospital who have no clinical need to be there.
With the number of old people set to rise considerably in the area over the next 15 to 20 years, health and social care experts have voiced worries that there may not be enough spaces to go round.
However, the city council said that the decrease was intentional and reflected a growing demand for care at home since the turn of the millennium.
Officials added that more care homes were to be built in coming years to improve the picture.
Labour's health spokeswoman in Edinburgh, Councillor Lesley Hinds, said: "We know the population demographic is going to change and we have to be ready for that.
"We don't know what people will want to do in the future, but it's important not only that there are enough care home spaces, but that there are enough to allow people to have a choice of where to go, rather than being sent to the only available space, which could be miles from their community."
The majority of care homes are private sector facilities, with local authority and voluntary sector homes accounting for about 40 per cent of total provision.
Opening residential homes privately used to be seen as an extremely lucrative venture, but as the property market peaked, many were sold off.
In total, there are 68 homes in Edinburgh, with places for 45 in every 1000 people aged over 65.
There is also concern about the number of specialist places available for pensioners with challenging conditions such as dementia.
Due to medical advances, people with learning disabilities such as autism are also living far longer than they would have before, causing an increased demand for places.
The Liberal Democrat's public health spokesman, Jamie Stone, said: "As the population ages it is vital that we safeguard care for the elderly. The most vulnerable should have access to a care home if they need it.
"I am especially worried that the number of places in care homes for people with learning difficulties is declining."
However, a city council spokesman said: "We do recognise the importance of care home places, which is why we are investing in new state-of-the-art homes, with the fourth one due to open early next year.
"Our Live Well In Later Life strategy takes into account the ageing population and our aim to support more people in their own homes.
"A key part of this programme is our successful re-ablement service, which has seen 6000 people helped to become more independent at home in the past year.
"This alleviates the need for more traditional and expensive care options and is being closely followed by the Scottish Government and other local authorities."