The first 75 jobs to go will be through voluntary redundancy and lay- offs. Owners of South Crofty mine, near Redruth, blamed the decision - which will take effect over the next six months - on the falling price of tin on the world market and the strengthening value of the pound against the dollar.
The workforce was told of the announcement yesterday in a meeting at Redruth Cinema.
It marks a long, sometimes nostalgic battle to save Cornwall's most distinctive industry, which during its heyday in the 19th century employed 30,000 people, spread through 400 mines. There were tin mines in the region before, during and after the Roman empire in Britain.
The mine's project manager, Bernard Ballard, said yesterday: "It's a very sad day. Tin-mining is the the great Cornish tradition." However, he said there would certainly be efforts made locally to keep the mine alive. "There is such strength of feeling here about it. There has got to be a way to keep it open.
"It would be an absolute tragedy if the mine closed and then the problems with the price of tin and the exchange rate changed. But as things stand, unless there is an intervention, it will close."
His views were echoed by Doris Ansari, leader of Cornwall County Council, who said: "This is a very sad day for Cornwall, which means far more than the immediate loss of jobs - tin-mining is probably the most potent aspect of Cornwall's history and heritage."
She urged local MP Cathy Atherton to lead a delegation to the President of the Board of Trade, Margaret Beckett, and called for a "regeneration package" for the area. It is feared the closure could have a knock-on effect on other jobs.
The beginning of the end of the industry came when the tin price collapsed in 1985, forcing the closure of mines across Europe. In 1994, when South Crofty also seemed doomed, 1,500 small investors, including the miners themselves, offered to buy pounds 500,000 of shares in a pounds 1m effort.
At the same time, the mine was taken over by the Crew Group of companies, a Canadian-based resource group.
Since their involvement, the mine has received cash injections of about pounds 6.3m. A company spokesman praised the "dedicated" workforce, which had reduced costs and increased productivity over the past years.
He added: "However, since early 1996, two major external factors have combined to force the company to take a very difficult decision to close the mine.
"The first was the significant drop in the tin price, which is quoted in US dollars; secondly, the substantial weakening of the dollar against sterling."
He said the price of a tonne of tin had fallen to pounds 3,200 - way below the pounds 4,000 a tonne minimum needed to keep the mine open.
Ms Ansari added: "This is yet another blow to the economy of an area which has twice the national average of unemployment. This also adds weight to Cornwall's campaign for special European funding status and emphasises the need to influence the new South West Regional Development Agency effectively."
The company has indicated that the mine will not be "mothballed" with care and maintenance, but would be abandoned.
This means that any last-minute attempt to rescue the enterprise will be a race against time. Already the workforce have stopped any "development", that is, the opening of any new areas for mining. For six weeks that means that any takeover would be able to continue with few problems.
But as the six-month closure process nears its end it will become more and more difficult - and therefore expensive - to reopen full production. Eventually, after the pumps are stopped, water levels will rise and hamper any mining attempts for the future.
A mining source said: "That will make it very difficult, though not impossible, to resume any mining in the future."
Despite the closure, the mine is not short of tin, with estimates of at least three years of reserves left.
The Government later promised support for the area. Barbara Roche, minister for small businesses at the Department of Trade and Industry, said: "The Government office for the South West and all the local agencies are ready to work closely with the local authorities about what can be done to alleviate the impact."
Ms Atherton said she was devastated by the news of the closure. "The livelihoods of so many people and their families depend on the mine.
"In this already depressed area, it is a severe blow. I think every tribute is due to the hard work of so many who put everything into making is successful. But, in spite of all their efforts they have been overwhelmed by economic circumstances.
"It is a very sad day for the whole of Cornwall ... It is impossible to express the anguish that will be felt across the county," she said.