The Royston care facility in Boswall Parkway, Granton will provide accommodation for 60 residents.
The new development is being delivered by a partnership between the council and Hub South West Scotland.
Graham Construction has been tasked with building the facility.
The new home will include en-suite bathrooms, bedrooms and group living areas.
It is also the sixth care home to be built in the city as part of the council's Live Well in Later Life strategic plan.
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Councillor Cammy Day was joined by representatives of the project to cut the first sod at the site.
Councillor Day said: "Our goal is to create homes for life for older people in quality residential accommodation which meets modern standards. This new facility will offer a caring and supportive service, as well as a good quality of life."
Richard Park, Operations Director of Hub South East, said: "Having already successfully delivered a number of facilities in partnership with the City of Edinburgh Council, on time and on budget, I am delighted to be marking the start of this new care home in Royston."
Group Executive Chairman of Graham Construction, Michael Graham, said: "It's a real privilege to play our part in helping all the future residents enjoy their lives to the full, both as individuals and as a community.
"We're absolutely determined that they'll have the very best facilities and quality of construction."
(LM)
