The 26-year-old was forced to withdraw from the Lions tour to New Zealand over the summer due to a hamstring problem.
But Taylor is now set to play against the Ospreys in the Celtic League in Frank Hadden's last game in charge before he takes up the role of Scotland head coach on a permanent basis on Monday.
Hadden said: "We are delighted to announce that Simon is back in action and we expect his inclusion to give everyone in Scottish rugby a lift.
"It has been a tough 18 months for Simon but it is fantastic to see him fit and raring to go.
"Everyone who has any interest in the game in Scotland must be pleased to see him back on the field."
Taylor is one of five changes to the Edinburgh team which lost 30-23 to Ulster at Ravenhill last week.
Scotland international full-back Hugo Southwell makes his first start in the Celtic League along with prop Alasdair Dickinson.
Phil Godman and Allan Jacobsen return to the side at stand-off and loosehead prop respectively.