The hospice in Granton will transfer to Kirklands House in Gogarbank late next year, continuing its work to care for terminally-ill patients and their families.
The house will be leased to the hospice by owner the Trefoil Charity, which works with children and young people with special needs.
The hospice cares for up to 30 inpatients at any one time, who will all be transferred to Kirklands House, along with services for around 200 further patients, who are cared for at the day hospice or by outreach workers.
Work began last week on the first phase of the St Columba's rebuild project, to create a new education centre on land next to the main site on Boswall Road.
Rebuilding the hospice itself will begin towards the end of 2011 and is due to be completed in 2014. This year the Evening News and its readers helped to raise more than 235,000 for the hospice's Buy a Brick appeal, which will go towards the full 7 million cost of the rebuild project.
Chief executive Margaret Dunbar said: "Relocating will help ensure that our patients and their families are not disrupted by construction noise, which could obviously have a very negative impact."
The building was once used by the Trefoil Charity to provide school facilities for children with special needs, and then as a holiday and activity centre.
It was more recently leased to the city council to provide care for the elderly but has sat empty for two years.
Trefoil chief executive David McArthur said the move to care for hospice patients there would be beneficial for both organisations: "We originally planned to sell Kirklands and put the funds to use on our various projects but as the recession kicked in, upgrading the building and finding a new tenant proved to be the ideal solution for us and St Columba's."
St Columbas is to be completely rebuilt with new inpatient wards, day hospice and consulting rooms.