A number of city institutions, including R W Forsyth department store on Princes Street, the Ritz Cinema on Rodney Street and jewellers Abbott of Greyfriars, were to disappear for good.
But it wasn’t all doom and gloom.
A fancy new cocktail bar, Charlie Parker’s, opened up on George Street, the Edinburgh Fringe was more popular than ever and the entire city went Royal Wedding daft to celebrate the marriage of Princes Charles and Diana Spencer.
In sport, there was success for Scotland at Murrayfield against Australia, while ex-Man Utd and Hibs star George Best brought his glamorous new team, the San Jose Earthquakes, to Easter Road.
We’ve had a deep dig through the archives at the Evening News to bring you 17 more memories of Edinburgh in 1981.
1. Greyfriars Bobby vandalised 1981
Vandals threw white paint over the statue of Greyfriars Bobby in Edinburgh, May 1981. A tourist takes a picture of Bobby. Photo: Alan Macdonald
2. Peartree in 1981
Rubbish and builders' debris at the back of Potterrow near the Peartree Inn in Edinburgh, November 1981. Photo: George Smith
3. Princess Diana wedding dress 1981
Two days after the Royal Wedding, copies of Princess Diana's wedding dress were on sale at Jenners department store in Edinburgh. Picture of model Karen Stead in Princes Street taken 31st July 1981. Photo: Bill Stout
4. Princess Grace of Monaco in Edinburgh 1981
Prince Rainier and Princess Grace of Monaco (formerly film star Grace Kelly) arrive at Edinburgh airport in September 1981. Photo: Alan Ledgerwood