LucasArts is to be closed down by new owners Disney as the brand looks to favour an external licensing business model over internal development.
The decision follows Disney's buyout of parent company LucasFilms and the Star Wars franchise for $4bn last year.
Disney has issues a full statement on the closure, stating: "After evaluating our position in the games market, we've decided to shift LucasArts from an internal development to a licensing model, minimising the company's risk while achieving a broader portfolio of quality Star Wars games.
"As a result of this change, we've had layoffs across the organisation."
"We are incredibly appreciative and proud of the talented teams who have been developing our new titles."
It signals the end for LucasArts, which had ultimately faced a bleak future, despite its previous success in the 1980's and 90's.
LucasArts was restructured in 2004 by then-president Jim Ward, and again following his departure in 2008. At the time, the firm had investments in both Star Wars and Indiana Jones games, in addition to other third-party titles.
However, development struggled and only titles such as the LEGO Star Wars franchise and other licensed titles made it to release.
Despite initial work on Star Wars MMO The Old Republic in partnership with EA development studio BioWare, publishing duties were eventually handed over to EA themselves.
The closure of LucasArts puts an end to on-going projects, which includes next-gen favourite Star Wars 1313, which caused a stir at last year's E3 expo.
Whilst the title was seen as one of the most anticipated of the show – and the next-generation of games – Disney is said to be clamping down on the newly acquired Star Wars license, halting work on all projects outside of the upcoming Star Wars films set to debut in 2015.
Presumably Star Wars 1313 – a title set between the already existing trilogies and focused away from traditional aspects of the Force and Jedi – didn't fit in with Disney's plan.
Disney has plans for new Star Wars projects, which will be handled through external licensing deals with developers, but it's a shame that one of the brightest spots of the next-generation, and one of the most decorated games studios, have effectively burnt out.