Dozens of police and council community safety officers swarmed to the Three Sisters on the Cowgate at around 8.30pm.
Hundreds of drinkers were evacuated and prospective customers turned away at the door. Eye- witnesses described a large-scale fight breaking out in one of the
main bar areas. Glasgow band Any Colour Black were told they were not going to be able to play before they had unpacked their gear.
Drinkers at the pub said trouble had been brewing throughout the afternoon as crowds drank in the sunshine. However, problems escalated during the evening, prompting security staff at the Cowgate pub to phone police, who then ordered management to close the pub down for the night.
One police officer at the scene last night said: "It's complete carnage in there. We've no option but to get everyone out."
Although most people left of their own accord others were dragged out by police and security staff, while officers separated minor scuffles outside the venue.
The closure will have cost the pub thousands of pounds on what would have been traditionally one of its busiest nights.
Other pubs in the Grassmarket and Cowgate such as Biddy Mulligan's were warned by police to expect a deluge of drinkers in the wake of the closure.
Sean Fish, 22, a South African student who lives in Newington, said: "It didn't take the police long to get in and weed out a few folk who must have been causing the trouble. We were all told to drink up and get out, quite a lot of people had to leave their drinks."
Another reveller, who had been in the bar for much of the evening, said: "I heard a lot of shouting and the smash of a glass. It looked like there was about to be a riot but we all got ushered out by the bouncers. I'd heard that it all harked back to something that had happened in the afternoon, apparently someone started on one of the bouncers."
One staff member in the pub, run by city chain Festival Inns, said this morning: "The police came to close us at 9pm last night and that was us for the night."
A spokesman for management at the pub said no-one was available to comment. A police spokesman said: "The Three Sisters was closed last night from 9pm and one arrest was made for breach of the peace."