The new service will be located at the firm's site and will also be backed by advertising as well as promotional activity.
Promotions on offer include live in-store performances by as yet unnamed artists, which will be recorded and available for download exclusively on the site.
Downloads are already available through its Virgin Megastores but this will be the first time the service has been packaged as a dedicated brand in the UK, enabling it to more effectively rival the likes of iTunes.
The new service is available either as pay-as-you-go or a monthly subscription package, which allows unlimited downloads and access to more than 1m tracks.
The service also includes internet radio, rip-and-burn software, music manager software and track sampling, as well as an "ask the expert" service.
Steven Kincaid, Virgin Megastores UK marketing director, said: "We are launching Virgin Digital as the demand for quality download intensifies.
"With a strong music heritage behind us and a high profile on the high street, we believe Virgin has the best platform to launch a digital service that will become the ultimate download sensation."
The service, which launched in the US last summer, launches in the UK on September 2.
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