People living in the Edinburgh city centre, Gorgie, Stenhouse and Sighthill suffered the problem for around two hours yesterday before repairs were carried out. The quango said it had been caused by a fault in a water tank that caused either low pressure or cut off supplies completely for a short time.
However some residents in other areas were still suffering from discolouration of supplies late yesterday.
In a statement, Scottish Water said: "We have identified a fault at one of our water tanks, which has caused low pressure/no water to customers. We hope to have all customers back in supply ASAP."
The water shortage came as some of the world's millionaire car enthusiasts had descended on the city.
Edinburgh was one of the pit-stops for the 2014 Gumball Rally where a number of supercars were paraded in the city centre.
But as the city welcomed the high-profile visitors at cafes and restaurants, many were left without running water in their toilets and had to bring in bottles of water to make coffees and teas.
Scottish Water said some residents may have taken longer to recover pressure. Those affected were in the EH1, EH2 and EH3 areas, in the immediate vicinity of the centre, and EH11 towards the east. Staff were continuing to investigate reports of discoloured water in the EH7 area, which includes Leith, Restalrig and Craigentinny.
A spokesman added: "This is currently under investigation and we apologise."