The restaurant, which opened 10 years ago by chefs Domonic Jack and Tom Kitchin, revealed the news via an Instagram post.
Jack said: “Sadly today [30 June], we have made the unavoidable decision to permanently close Castle Terrace.
“The impact of the coronavirus pandemic, along with the current guidelines, and no upcoming tourist trade in Edinburgh mean it is no longer financially viable for us to continue to operate. It is heart-breaking to close the doors after 10 successful years and it is not a decision we have made lightly.”
He added: “I want to personally thank all our loyal guests and visitors over the years, and for the special memories Castle Terrace has given me and my team. It’s a really sad day.”
Castle Terrace opened in 2010 and received a Michelin star in 2012, but lost it in 2016.
Commenting on the closure via his Instagram page, Kitchin added: “It’s with great sadness that Castle Terrace will forever close its doors following the pandemic. My thoughts are with my great friend and business partner Dominic Jack after 10 incredible years.
“We’ve made so many efforts here and Covid-19 has had such a devastating effect on the hospitality industry. With no tourists and mounting costs we are left with no choice.”
He added: “Castle Terrace has had a wonderful following over the years with people who have been wowed by the incredible level of gastronomy and service from Dominic and team.
“Today is a sad day and tonight we will raise a glass to this wonderful restaurant.”