The tabot was found at St John's Episcopal Church
The wooden tabot, or tablet, represents the ark of the covenant.
It will be handed back in a special ceremony due to be held early next year.
The tabot is a 6" square carved with an African inscription.
It was found in a cupboard at St John's Episcopal Church in the Scottish capital's Princes Street.
The minister who found it, Reverend John McLuckie, had lived in Ethiopia and recognised its religious significance.
He checked with experts and discovered it had been stolen by British soldiers after they had invaded Ethiopia, which was then called Abyssinia, in the 1860s after a diplomatic dispute.
Rev McLuckie said: "It was very exciting because I knew it was an object of great significance and holiness.
"I was also slightly surprised that we had one and slightly shocked that we should be keeping it in a cupboard when it is something of such significance to Ethiopian Christians."
The country has been campaigning for the return of hundreds of precious manuscripts, crowns and other sacred items ever since.
Church officials will hand the tabot back at a ceremony due to take place in Edinburgh at the beginning of next year.