The announcement from the global fast-food retailer comes on the tail of the TescoTV launch earlier this year, which has had positive results so far.
McDonald's is working with Brightspace, the in-venue screens company, on the channel, which will initially be rolled out across 10 key sites in London, with between three and six screens in each store.
The programming on the channel will include content on fashion, sport and music and will be transmitted on a time-sensitive basis. For example, during the mornings the channel will focus on news.
McDonald's is understood to have approached five or six brands with partnership opportunities on the channel.
Andy Pitman, chief executive of Brightspace, said: "The programming needs to reflect the fact that although people don't come to McDonald's to watch TV, they will be entertained by screen content while they are there. We are therefore devising a totally new editorial approach -- with content strands being created for transitory audiences while being blended editorially for brand partners."
TescoTV was recently the subject of some research by outdoor advertising company JCDecaux, which is also the exclusive provider of media sales to Tesco TV. It found that advertisers who have placed the first trial campaigns on the in-store promotional vehicle have increased sales of their brands by up to 10%.
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