Twelve tents have been erected outside the historic Linlithgow Palace in West Lothian by the French couture house.
Chanel's annual Metier d'Arts show at the 15th century palace will take place on December 4. The catwalk event will show work of the artisan manufacturers housed under its Paraffection umbrella.
The show has previously been hosted in Paris, Tokyo, London, New York and Shanghai.
Speculation is already mounting as to which celebrities will be descending on Linlithgow, with mention of Brad Pitt, the star of the latest Chanel No.5 campaign and his partner Angelina Jolie. Previous star guests have included Diane Kruger and Vanessa Paradis.
Chanel confirmed that creative director Karl Lagerfeld "has chosen Edinburgh as the location for the collection, inspired by the rich heritage of Chanel in Scotland, and the craftsmanship of Scottish tweed and cashmere, that are an integral and iconic part of Chanel's collections".
The announcement comes after Chanel agreed to buy Borders-based cashmere knitwear manufacturer Barrie Knitwear, securing 176 jobs in Hawick.
The company said: "Barrie Knitwear has worked with Chanel for more than 25 years producing cashmere knitwear, including Chanel's iconic two-tone cardigans. This acquisition safeguards the future of their business."