Around 1.2km of flood defences will be built along the river at Murrayfield and Roseburn, with contractors McLaughlin and Harvey Ltd already on site.
It comes after a review was launched into botched works during the first phase – in Stockbridge and Canonmills – which saw costs almost double to £30 million.
Council bosses said they had “learnt lessons” from the mismanaged scheme, with the second part due to be completed in early 2018 at a cost of £25m.
Councillor Lesley Hinds, environment leader, said: “We have been working closely with the community and local stakeholders to ensure they are well aware of the work taking place, and to ensure the process goes smoothly.
“It’s been great to visit the site to see construction begin and I look forward to all the benefits these improvements will bring to the area.”
Work will include the building of new walls, embankments and floodgates beside the waterway, as well as replacing two bridges over the river at Baird Drive and Saughtonhall Avenue to provide room for vehicles, cyclists and pedestrians.
The defences are designed to protect homes and businesses and come after severe floods wreaked havoc in 2000.
Scores of properties were evacuated as flood waters rose by more than 4ft, leaving a trail of destruction many blamed on a lack of action from the council.
As part of the wider project, contractors have pledged to carry out landscaping to improve the appearance of the surrounding area, including Roseburn Park.
Martin Curran, contract manager at McLaughlin and Harvey, said: “We are delighted to be working alongside Edinburgh council in the delivery of this essential scheme. Having recently undergone a period of detailed design we are glad to say that the main construction works have begun in various locations throughout the project.
“We are making excellent progress to date which has been aided by the cooperation of the stakeholder groups, local residents and the general public at large. Stakeholder management is fundamental for the project, [and] we are actively engaging with the local residents and businesses on a daily basis, keeping them up to date with our work activities.”
He added: “We hope to achieve successful delivery of this project over the coming months with as minimal disruption as possible to the local residents and businesses. We would like to take this opportunity to thank the local residents for their continued support.”