The statue on The Mound was vandalised soon after it was unveiled in 1910 and the youth responsible is believed to have been sent straight to borstal.
Now a military history group is to restore the monument, which is dedicated to the men of the famous Scots regiment who died in the Boer War.
The One O'Clock Gun Association is to raise 10,000 to replace the bayonets, rifle barrels and pipe drones that were snapped from the battle scene on the plinth.
And the 11-foot-tall soldier who stands on granite pedestal will be cleaned up and restored to his original bronze colour.
George Robinson, secretary of the association, said: "The trees around it have grown so tall that people hardly even notice it - it has become Edinburgh's forgotten statue.
"It's been so badly beaten by the weather it's almost green now instead of bronze. You would think he was in camouflage uniform he blends in so well with the trees now you hardly notice him.
"It is so important that things like this are maintained because it's the Black Watch we're talking about - Scotland's most famous regiment.
"Since the creation of the Royal Regiment of Scotland statues like this one have become even more important. We need to make sure that young people and people moving to Scotland remember the country's heritage."
The monument is the only memorial dedicated to the Black Watch in the Capital and commemorates the bravery of the men who fell in the Boer War of 1899-1902.
Permission to carry out the refurbishment work has been given by Dorothy Marsh, the city council's head of conservation, and the One O'Clock Gun Association is to start a fundraising campaign right away.
Businesses, charity foundations and army veterans are to be asked to contribute, and collections will be carried out across the city.
Exactly what happened to the soldiers' bayonets has been lost over the years, but a comment posted on an internet website last year appeared to shed some light on the mystery.
On the EdinPhoto site, Corstorphine resident Bill Irvine wrote: "If you look at the memorial on The Mound you will notice that the bayonets on the rifles have been removed.
"My father told me that, as a boy, his brother was responsible, for which he was sent to borstal. I believe the deed was committed not long after the memorial was unveiled."
Lieutenant Colonel Roddy Riddell, secretary of the Black Watch, said he expected the battalion will help fund the repairs.
He said: "Anything that retains important memorials such as this one is a very good thing. We are delighted that the work is to be carried out and I am sure that we will look to help fund it.
"There is no other monument to the Black Watch in Edinburgh and being the capital city that makes it a very important monument for us."
Councillor Donald Anderson, the city's culture leader, said: "The Black Watch Memorial is a striking monument in the middle of the city. I am delighted that such an important piece of the city's military heritage is being restored."
An Army spokeswoman said: "It is fantastic that this work is to be carried out. The statue marks an important part of our history and it is important to keep all such statues in a good state."
The statue was erected in 1910 to remember the bravery of the men who died during combat in the Boer War of 1899-1902.
The 2nd Battalion Black Watch men who fought in South Africa were commanded by Major General Andy Wauchope, who was born in the Niddrie area.
He was among the 300 officers and men who were mown down by the Boers in the 1899 Battle of Magersfontein.
The Black Watch monument was unveiled on May 25, 1910. But there was no special ceremony because the country was in mourning for King Edward, who died earlier in the month. The 2nd Battalion were also stationed at Limerick, Ireland, at the time.
The soldier that forms the main part of the statue is over 11ft tall, and the pedestal of red granite is 17ft high.
The inscription reads: "To the memory of officers non commissioned officers and men of the Black Watch who fell in the South African War 1899-1902."