BAE Systems said it was being hit by a "significant" reduction in workload following a peak of activity on the current aircraft carrier programme.
The company said shipbuilding operations will end in Portsmouth in the second half of next year, but an engineering team will be retained to support the new Type 26 warships, which will be built in Glasgow.
BAE Systems has agreed with the UK Ministry of Defence that Glasgow would be the most effective location for the manufacture of the future Type 26 ships.
Consequently, and subject to consultation with trade union representatives, the company proposes to consolidate its shipbuilding operations in Glasgow with investments in facilities to create a world-class capability, positioning it to deliver an affordable Type 26 programme for the Royal Navy.
The cost of the restructuring will be borne by the Ministry of Defence. The implementation of these restructuring activities will sustain BAE Systems' capability to deliver complex warships for the Royal Navy and secure the employment of thousands of highly skilled employees across the UK.
The closure of the city's shipyard, which once kept the British Empire afloat, brings 800 years of power and pageantry to an end.
Everyone knows Britain no longer rules the waves, but we may never be sure of the motives that have kept Scottish shipbuilding in business.
The historic naval city and surrounding area has become vulnerable to big shocks like this and the prospect of new jobs is far from certain.