Franco Martone said two bins used by nearby flats had lain unemptied for more than a week, with rubbish littering the pavement outside his Hispaniola Spanish eatery on Drummond Street.
Mr Martone said he spotted dirty nappies, leftover food, glass bottles and even rats when he arrived to start work yesterday morning, and now plans to remain closed until the city council cleans up the street.
He said: "The bins are so full and the bags have been opened by animals, foxes at night or maybe gulls. I can't open – it is impossible. As soon as you open the door, the rubbish comes into the restaurant because it is right up at the door. It is an absolute mess and a lot worse than it's ever been before.
"I saw three rats running about in the rubbish. It's just disgusting. There is a very bad smell, when people pass by they hold their noses. Sometimes I have spotted needles also."
Father-of-three Mr Martone, who lives in the Grange, said there had been problems with the bins since the restaurant opened in 2008. The two large black bins are just a few metres from its entrance.
He also claimed he had asked the council to move them further along the street. He added: "Everything you can imagine is lying outside the restaurant, which is very historic and where Robert Louis Stevenson used to drink. The tour guide comes round two or three times a day with tourists to show them the restaurant's beautiful frontage.
"It is absolutely gorgeous and everybody says it's a shame they can't take a picture because of the rubbish bins outside."
Mr Martone even had to send a party of 43 people who had booked a table for 1:30pm yesterday to one of his other eateries, Ciao Roma on South Bridge. Although Mr Martone said the rubbish inside the black bags had spread across the street several times, yesterday was the first time he felt the need to close. He also claimed he had reported the problem a dozen times.
He said: "Before I would send my cleaner to clean it up but now I think, 'why should I have to do the council's job when I pay enough taxes here'? I'm fed up."
Italian Mr Martone moved to Edinburgh in 1977. He also owns Bar Italia on Lothian Road and Martone, opposite the Balmoral Hotel.
A council spokeswoman said the bins were emptied twice weekly. She added: "We have had one complaint yesterday, on which we are acting."