Friary Lodge in North London has written to residents asking them to move out by the end of the month.
It comes as many care managers warn that they cannot cope with the financial pressures of the pandemic, with staffing and PPE costs soaring and many rooms now vacant.
In its letter to residents, Friary Lodge said "it is no longer possible to provide you with care and support that you need because of ongoing staffing issues and operational difficulties due to Covid-19".
The home says it is temporarily closing, with residents already being moved out to alternative accommodation.
Mary Masters is 91 and moved on Monday.
Her daughter Susan told ITV News her "biggest concern" was that she could lose her mother due to the disruption.
"She's very sad, she liked that care home," Susan Masters said.
Susan Masters' mother has moved to a different care home:
Friary Lodge's solicitor told ITV News: "Care homes and their residents have been greatly let down by the government."
They added: "The government has provided too little support to care homes, and too late.
"Many residents will die as a result, and some have already."
Other care homes have warned that they will also have to close unless they are given emergency funding.
Wren Hall near Nottingham has lost 15 residents to Covid-19 - that's a quarter of the home.
The manager Anita Astle told ITV News that she has spent £13,000 on PPE in six weeks alone, with empty beds costing £60,000 a month.
She warned that without additional loans or government bailouts, the home will have to close within eight weeks.
"Your goal is to provide the best care possible [...] the thought that all of that is for nothing - and it all gets taken away..."
It's an emotional situation for care home manager Anita Astle:
Last week ITV News reported how many councils are yet to pass on emergency government money to care homes.
The Communities Secretary Robert Jenrick has asked local authorities to hand over an extra 10% of funding, out of an additional budget of £3.2 billion.
But some councils have yet to promise any money at all, with others only offering a five per cent uplift, complaining that central government funding is not sufficient.
But if care homes can't balance the books, then thousands of lives hang in the balance too.