Flannels, owned by Mike Ashley’s Frasers Group, will move into the ground and first floors of the building.
The news will come as a major boost for retail on Princes Street after a number of closures and relocations into the new St James’ Quarter - leaving behind empty units.
BhS was part of the city centre landscape from 1967 until its closure in 2016.
Major Edinburgh dentistry firm snapped up by rapidly growing Scotland-wide group
More than half of students targeted by scammers, with Edinburgh among hotspots
Fish and Chips Edinburgh: The 10 best Edinburgh fish and chip shops - as voted by EEN readers
Omega x Swatch MoonSwatch: Swatch gives update on MoonSwatch availability – and Edinburgh still only location outside London selling ‘hottest watch on the planet’
Traveltech trade bodies in Scotland and Catalonia embark on partnership journey
The store was purpose-built and is Category B-listed by Historic Scotland in 2008 because it was among the first “panel buildings” – so-called because of a group of city planners who were pursuing proposals to create a continuous first-floor walkway along the length of Princes Street.
Since then the site has undergone major refurbishment with Premier Inn opening a hotel at the rear on Rose Street.
Now, Flannels is set to take over 24,000 square feet of the listed building.
The let has been managed by LaSalle Investment Management - in 2020 the agents were also given permission to build a huge gym in the basement.
Ashley’s Flannels chain is one of the few retailers looking to expand, with three flagship stores open, and plans for up to 15 more across the UK in the next five years.