Appledore Shipyard in North Devon will close in March 2019.
Babcock International announced the decision this morning.
The company will now begin a consultation process, with all 199 workers offered the chance to relocate to other Babcock premises.
Appledore recently lost its contract with Italian shipbuilding company, Fincantieri, sparking concern for the future.
Since January, workers at Appledore have been redeployed to Devonport, with trade unions reporting low morale and fears for jobs.
Thousands of people signed a petition to save the site from closure, which was handed in to the House of Commons earlier this week.