The towpath between Wester Hailes and Hermiston has been revamped under a 300,000 project jointly funded by the city council, the Scottish Government, and transport charity Sustrans.
It has been transformed from a "muddy mess" to a new concrete surface while four access ramps to the Heriot-Watt University campus have been added.
Barrier-type gates have also been removed and replaced with cycle-friendly chicane gates, one set of which features designs by school children from Canal View Primary School.
City transport leader Councillor Gordon Mackenzie, cut the ribbon on the project yesterday.
He said: "It is fantastic to see this new towpath open to the public as the new path proves our on-going commitment to improving the public space around Wester Hailes and the Union Canal.
"This space is ideal for cyclists and walkers alike.
"It provides a pleasant place for health and fitness as well as ensuring that the city is an attractive, safe and secure place."
A previous towpath enhancement programme in 2009 resulted in a 30 per cent increase in people visiting the canal and bosses from British Waterways hope the latest project will have the same impact.
David Lamont, the organisation's head of operations in Scotland, said: "The Union Canal is a fantastic community asset and upgrading the towpath means many more people will come, discover the waterway and enjoy it.
"We are grateful for the ongoing commitment and support of the city council and Sustrans. With this extensive towpath upgrade completed, the Union Canal is, more than ever, a great place to walk, run or cycle. You can come for leisure, use it as a tranquil route to commute to work or test your mettle, walking or cycling from east to west along Sustrans' new route."
The new towpath was welcomed by Peter Hawkins, a frequent canalside commuter and member of cycling association CPC Scotland.
He said: "I saw what it was like before – it was just a muddy mess. It was wall-to-wall puddles and cyclists usually emerged at the other end wet and filthy.
"The new towpath is ideal for cyclists and as it's practically maintenance-free it will last for years."