Greene King, who operate the 17th century pub in Linlithgow, West Lothian, announced plans to change the pub's name last year - despite outcry from furious locals.
They threatened to boycott the bar if the name was changed - claiming it is part of local history.
The pub was originally named after the local myth which told of a black greyhound who swam to an island in Linlithgow Loch to keep her stranded owner alive.
But now Greene King, the brewery that owns the pub, has decided to change the name to The Willow Tree.
The company had previously suggested the pub could renamed The Black Hound - but changed it due to the poor reception it received.
Greene King CEO Nick Mackenzie confirmed the name change and said the decision was not meant to 'diminish or denigrate the heritage' of the town.
Mr Mackenzie said: "Changing the pub's name has been something we've been considering for some time and I'd like to thank people who've written to us to offer their views.
"There's been plenty of publicity around those who don't agree with our decision, but we've also had letters of support from people in Linlithgow.
"This is a difficult balance and throughout this we have continued to highlight our respect for the history of Linlithgow.
"Our decision is not meant to diminish or denigrate the heritage of the town but at the same time we recognise that language has changed and the name can be extremely offensive to people.
"Our commitment to changing the name is unwavering, as we strongly believe it is the right thing to do for our teams and our customers, but we do understand why our original idea to just change the one word on the sign from Bitch to Hound was not well-received by all.
"It was done with the best of intentions to retain the spirit of the story, but we've listened to people who felt it would impact negatively on the town's emblem.
"We're pleased therefore to be instead changing it to The Willow Tree, which retains links to the town's heritage, and look forward to this next chapter of the pub's history."
Sir Geoff Palmer, Scotland's first black professor, previously criticised the name change and suggested it could be seen as actually causing offence to black people.
More than 11,00 people signed a petition to keep the historical name and said the name was 'ingrained in the history of the town'.
