The agency picked up the business after a two-way pitch against Karmarama.
The agency has been briefed to create a universal campaign that can be adapted for all the European markets in which the company operates Dungeons.
The recently opened Amsterdam Dungeon joins the macabre attractions in London, Edinburgh, York and Hamburg.
The first TV work will break just before Christmas in Amsterdam and across the rest of Europe in the new year, with work for the English and Scottish Dungeons scheduled for March 2006.
Mark Fisher, the managing director of Merlin, said: "In the past year, we've updated all of the Dungeons, giving them new attractions and making them more fun. We need an agency that not only understands the brand, but can also put some fun into the work. We think that Leith can definitely do this."
Jeremy Pyne, the managing director of Leith, said: "Despite what other agencies might say, there is only one client from Hell, and we've got it."
Last week, Merlin also appointed Delaney Lund Knox Warren & Partners to its £6 million creative account for Legoland.
The agency pitched against WCRS and Clemmow Hornby Inge to win the business.
It will create work to promote Legoland's theme parks in the UK, Denmark, Germany and California.
The company is supplying funds for a massive ad campaign following its 70 per cent acquisition by the private equity group Blackstones.
Under the terms of the deal, Legoland became part of Merlin Entertainments, which also owns Sea Life Centres and Seal Sanctuaries across Europe.
Both pitches were handled by the AAR.