Port of Leith Housing Association (PoLHA) and the City of Edinburgh Council have begun developing the project in Leith.
CCG (Scotland) will build a total of 94 new homes on the 18th century Leith Fort site.
62 of the homes will be owned by PoLHA with 32 units owned by the Council for social rent.
The properties will be a mix of one, two, three and four bedroom homes, with each property having access to private south west facing gardens.
A communal landscaped area and parking provision will also be provided.
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Keith Anderson, Chief Executive of PoLHA, said: "Building high-quality, affordable housing in Leith and North Edinburgh is at the heart of what we do and we are delighted to breathe new life into the former Leith Fort site which will complement our existing mix of developments in the city.
"Many people still have difficulties in accessing good quality homes which is why Leith Fort will help meet a wider range of needs."
Councillor Cammy Day added: "I am delighted that work has started on this development, which will offer much-needed, high quality and energy efficient homes at a price that people can afford. This is an historic site and the finished development, complete with gardens and landscaping, will be an attractive addition to the Leith community.
"We have trebled the number of affordable houses being delivered in Edinburgh to around 1,500 a year through programmes such as 21st Century Homes and will continue to work in partnership with organisations such as the Port of Leith Housing Association to deliver as many as possible."
(LM/CD)
