The new homes, which will be complete by 2020, will be spread across a series of 14 blocks. Residents will have access to amenity areas and a large public green space will be at the heart of the development.
Included in the design is a mix of flats and houses. There will be 108 homes for affordable rent and 86 for market rent.
The development is the latest of the Council's housebuilding projects to go on site, new homes having recently completed at West Pilon Grove and new affordable housing is almost complete at Clermiston and Fernieflat Neuk. The £24.6m investment at Craigmillar town centre is funded by the Council with £3.2m in grant funding from the Scottish Government.
The Council has nearly 800 affordable homes under construction across the city with nearly 3,000 new homes in design development.
The new homes are being built by construction firm CCG (Scotland) Ltd. The company is currently on site building 75 homes for the Council at Greendykes and they recently completed 94 homes for the Council and Port of Leith HA at Leith Fort.
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The Leith Fort development has won a total of five awards, most recently securing the Herald Property Awards for Best Affordable Development of the Year.
In addition to delivering modern, energy efficient homes, the contractor will provide apprenticeships, engage with local schools and colleges and provide a community investment fund.
Housing and Economy Convener, Cllr Kate Campbell, said: "It's so exciting to see work starting on these new homes and it won't be long until people are able to move into them. With so many people in need of a home in the city it's good to see progress being made and the regeneration of Craigmillar with good quality affordable housing.
"We've pledged to build 20,000 new affordable homes along with our housing association partners in the next ten years and this is a very welcome contribution towards that goal."
CCG Director Calum Murray said: "CCG was directly appointed by the City of Edinburgh Council through the SPA NH1 Framework and from the outset, Craigmillar 12-15 has been built upon an ethos of project partnering and collaboration. By working together, the masterplan has evolved into one that works sustainably, both economically and environmentally, as well as being a project that has been delivered much faster than by traditional methods, with an overall pre-construction saving of 20 months.
"Our experience of working in Craigmillar has ensured that we understand the needs of the community both in terms of the housing which will be delivered to the highest standards of quality and environmental performance as well as a legacy for the town which includes jobs, training and community donations. We look forward to continuing our work here with the Council over the next two years."
