Sony is to close down its Liverpool studio as part of a wider reorganisation, the platform holder has confirmed to CVG.
It is believed that Michael Denny, the man who operates PlayStation's European studio business, visited Sony Liverpool on Wednesday morning to explain to staff that the group would close.
Sony is looking at relocating staff at Sony Liverpool to other parts of the business, the company told CVG.
It is only the development team that will be affected by the measure. Sony's Liverpool campus will still operate the Xdev team, localisation, the finance group and other such divisions.
In a statement, PlaytStation Europe said: "It has been decided that Liverpool Studio should be closed. Liverpool Studio has been an important part of SCE Worldwide Studios since the outset of PlayStation, and have contributed greatly to PlayStation over the years.
"Everyone connected with Liverpool Studio, past and present, can be very proud of their achievements."
Sony Liverpool has undergone restructuring on two previous occasions since 2010. In March last year it was trimmed as part of a wider reorganisation of UK studios.
It is not believed that any other UK studio will be cut as part of the reorganisation.
Sony Liverpool formed in 1984 as Psygnosis and is responsible for scores of games such as Wipeout and Destruction Derby.
The developer started out developing a number of ZX Spectrum and Commodore 64 titles, but made a name for itself in the '80s with its breakthrough title Shadow of the Beast.
Sony acquired the group in 1993 and it went on to create key PlayStation games such as Wipeout, G-Police, Formula One and Colony Wars. In 2010 a number of projects at the studio were terminated, though the PS Vita Wipeout project remained.
The closure of the group will release a significant amount of development talent across the Liverpool area.
Sony said that "it was felt that by focusing our investment plans on other Studios that are currently working on exciting new projects, we would be in a stronger position to offer the best possible content for our consumers."
Sony now has 14 companies in its Worldwide Studios group.