The sword, made in Edinburgh, was carried into the 1815 battle by an officer of the 2nd or Royal North British Dragoons – The Scots Greys.
The regiment, formed in 1678, played a heroic part at Waterloo. In one famous incident, Sergeant Charles Ewart captured the eagle standard of the French 45th regiment – leading to the adoption of the eagle on the Scots' cap badge.
The sword, valued at 4,000, is the highlight of a number of Scots cavalry items to be sold at Bonhams on 13 July.
Chris Allen, Bonhams' consultant for arms and armour, said it was not known what became of the sword's owner.
He said: "This officer's sword is of a type introduced in 1796 and used until 1822, and would have seen action at Waterloo.
"Its owner would have carried it in the Scots Greys' charge. One can imagine him wielding it against the French ranks.
"It was carried on his belt, suspended from straps. It would have done some damage, but sadly we do not know what became of its owner."