Eidos has confirmed to Develop that it has close its Rockpool Games studio in Manchester.
The publisher bought the studio in February 2007 to boost its presence in the casual games sector.
Around 14 Rockpool staff have been made redundant as part of the move.
An Eidos spokesperson said: "As a company we need to focus our efforts on high-quality titles that will deliver long-term franchise value, and in these incredibly challenging and competitive times we need to pro-actively manage our cost base.
"This decision was a difficult one to make and we would like to thank these employees for their hard work and we wish them well in their future careers."
Two weeks the publisher revised its full year projected revenues down £20m after lower-than-expected sales of Tomb Raider: Underworld.