Writers and artists including Ian Rankin, Alasdair Gray, and Turner Prize winners Richard Wright and Martin Boyce attack Creative Scotland's "ill-conceived decision-making; unclear language, lack of empathy and regard for Scottish culture".
In the letter, leading arts figures say that trust between artists and the funder, which spends Government and lottery money, is "low and receding daily".
And they make seven key demands of the body which has been come under heavy criticism, particularly in recent months, over changes to the way artists and arts companies are funded.
The artists stop short of calling for resignations or an official vote of no confidence, but they say Creative Scotland is damaged at the heart and that artists' faith is at an unprecedented low.
The letter marks the onset of a full-scale campaign from artists to reform the funding body. Other signatories include playwright and artist John Byrne, writers Don Paterson, James Kelman, AL Kennedy and Andrew O'Hagan, the nation's Makar Liz Lochhead, playwrights David Greig, Zinnie Harris and David Harrower, and composers James MacMillan and Sir Peter Maxwell Davies.
The national and international standing and reputation of its many signatories will cause deep unease at the Scottish Government, whose Culture Secretary, Fiona Hyslop, has called for the body to improve and clarify its relationships with artists in recent months.
It will also put more pressure on Andrew Dixon, chief executive of the body, who recently gave evidence at Holyrood defending Creative Scotland.
Also in the letter, the group call for Creative Scotland to "genuinely acknowledge the scale of the problem"; to "affirm the value of stable two to three year funding for small arts organisations"; and to end the use of "business speak" jargon.
They call on the body to revisit its policies with a concentration on social and cultural as well as commercial values; to redesign funding processes; ensure funding decisions are taken by people with artform expertise; and to establish an effective system of dealing with complaints as swiftly as possible.
Anger has been growing for months in the cultural community against the body led by Mr Dixon, former chief executive of the NewcastleGateshead Initiative, Venu Dhupa, its director of creative development, and its chairman Sir Sandy Crombie, former chief executive of Standard Life.
Creative Scotland was formed two years ago of a merger of Scottish Screen and the Scottish Arts Council and this year controversy over its policies, notably the removal of fixed term flexible funding for more than 40 arts organisations, has been growing, as well as frustration with its attitude towards critics.
In Parliament, Mr Dixon said he would prefer artists to talk to Creative Scotland rather than through the press or online.
On this, the letter says: "Individual voices have also been raised from many quarters both privately and in public.
"These concerns have gone unanswered or been met with defensiveness, outright denial, or been ascribed to problems with 'communication'."
The organisers of the letter said many artists approached to sign it declined for fear of endangering their future funding.
In a statement, those who sent the letter to Creative Scotland said: "Our hope in putting together this letter is to begin a process of formalising, witnessing and testifying to the genuine anger that many artists feel; the belief that Creative Scotland is damaged at the heart, and that while this is so, artist faith is at an unprecedented low – quite an irony in this designated Year of Creative Scotland."
Ms Hyslop said: "My support for Creative Scotland and its leadership was expressed in my recent letter to Sir Sandy Crombie, which also urged the organisation to be open and responsive to the sector's concerns. My view has not changed."
A spokesman for Creative Scotland said: "We absolutely acknowledge we have issues in terms of restoring trust and collaborative working practices with the arts and culture sector, where this has faltered, and we are working hard to do this.
"We are working closely with representative bodies from the cultural sector such as the Federation of Scottish Theatre, the Literature Forum, the Scottish Contemporary Arts Network, Craft Scotland and others and have been making real progress in recent weeks.
"We are totally committed to working collaboratively with the arts and culture sector, we are listening very closely to what that sector is telling us and we are taking positive action as a result across a number of operational and strategic areas."