Ms Steven, from John O’Groats but now living in Aberdeen, was heartbroken about the tragedy and now wants to thank staff who tried to save the tot.
Iain’s mother Ashlyne Mackay, the musician’s niece, was one of three women seriously injured in the accident and remains in hospital.
Ms Steven, a renowned fiddler, composer and tutor, had been working on the CD before the tragedy, but has now decided to dedicate it to Iain with proceeds going to Glasgow Children’s Hospital Charity.
She said: “It is so fitting that the CD is released in his memory as he was a gorgeous little friendly boy, with an infectious personality.”
The album, which features 67 tracks, is due to be unveiled soon with pre-orders being taken now.
Traditional musician Karen Steven dedicates CD to toddler killed in Caithness crash