Lesley Bothwell, 55, has been accused of dragging the youngster around the floor by the ankles and restraining him aggressively while he was in her care at Barnton Nursery in Queensferry Road, Edinburgh.
Court officials have confirmed that she is due to stand trial early next year in connection with the alleged offences.
It is understood that the Royal Mile nursery, which is also owned by Ms Bothwell, is still in operation.
The Royal Mile nursery website states that Ms Bothwell, who is from Barnton, opened her first pre-school centre in 1984.
She also established a small “pre-prep school” in Goldenacre, called New Town Prep, in 1988.
Ms Bothwell, who now lives in Fife, is also described on the website as “a passionate horse breeder and keen horse woman”.
A Police Scotland spokeswoman said: “Police in Edinburgh arrested and charged a 55-year-old woman in connection with the assault of a four-year-old child, which occurred at a nursery in the west of the city on July 2.”
Staff at the Care Inspectorate said they were investigating four complaints against Barnton nursery, adding that one of those had been passed to police.
A spokesman said: “We have since received notification from the care provider of their intention to cancel the registration of the nursery with effect from September 7, 2015.
“Anyone with a concern about a care service should contact our helpline on 0345 600 9527.”
Local councillor Lindsay Paterson said she was concerned to hear of the charges and urged the city council to work with families and nurseries to ensure that no youngster misses out on pre-school education.
Ms Paterson, Conservative representative for Almond, said: “Any allegations of that kind are shocking.
“It’s ongoing at the moment so we will have to wait and see what the result of the court case is.
“It’s going to be a worrying situation for parents whose children were attending the nursery.
“I think the Care Inspectorate have a thorough investigation system so, at this stage, I would just be looking for collaboration between the council, parents and other nursery providers on the issue of finding places for children whose nursery is closed.”
Ms Paterson added: “A lot of local parents will use that nursery so it will obviously be a concerning time trying to find a new nursery for their child.
“You just have to hope that parents are able to find alternative childcare provision, which I’m not sure is particularly easy.”
Ms Bothwell declined to respond to requests for comment.