The project will begin with extensive repairs to 37-41 Nicolson Street, which currently houses a Pound Savers store, in order to restore the building's original 110-year-old shop front.
Restoration work will unveil the original cast-iron shop front on the C-listed building, which is thought to have survived largely intact beneath its timber framing.
Further work on the 138,000 scheme will include the repair of decayed and cracked stonework on the front of the building.
Money for the project comes in the form of a grant to the building owner which is repayable on the sale of the property.
It is hoped this scheme will be the first of many along the busy Southside route that will see its historic buildings returned to their former glory.
The move today won the backing of heritage groups.
Fiona MacDonald, conservation architect for Edinburgh World Heritage, said: "This is an exciting opportunity to rejuvenate a key route into the World Heritage Site.
"Sensitive restoration work on such a prominent building will make a real difference to both the visual impact and character of the street in this busy district of the city.
"Hopefully, surrounding businesses will recognise the positive impact of this restoration and follow our example."
The building at 37-41 Nicolson Street was known in the late 19th century as McIntyre's drapery stores.
John McIntyre & Co was described as "Warehousemen and Costumiers of ladies' dress", and used the three floors of the building to sell its wares.
The building has retained its original open-plan interior and decoration, including cast-iron columns and ornate plastered ceilings.
Conservation architect Stephen Newsom said: "The building is an early example of a purpose-built commercial emporium, with many intact original features.
"The proposed work will ensure that the property survives and restoration of the shop front should create an immediate impression of the quality of the building which lies within. This quality is something of which passers-by are unlikely to be aware."
Edinburgh World Heritage has been responsible for refurbishing and cleaning up a number of key buildings in the Capital in recent years. It is currently helping to restore the Nelson Monument and its time ball mechanism.
Smaller projects, such as last year's work to replace missing railings and rebuild front walls at the B-listed 5-7 Cambridge Street, have also been undertaken.
Martin Fairley, Historic Scotland's head of investment and projects, said: "The work done by Edinburgh World Heritage will mean that this historic shop front is restored to its original state, improving its appearance and acknowledging the history of this part of Nicolson Street."