The Namco Ireland Ltd plant in Tipperary town is to close with immediate effect with the loss of 42 jobs.
Workers were assembled yesterday morning and told that closure was inevitable following a review of Namco's European commercial game products operations.
Staff feared the worst two weeks ago when seven administrative workers were let go. Namco manufactures high-tech videogame equipment mainly for sport.
It is another devastating blow to the Tipperary town economy, having suffered huge job losses in recent years with the closure of Tambrands, Mass Mutual, Irish Pride and 7-up.
Immediately after the announcement members of SIPTU entered discussions for a redundancy package. Mr Pat Picham, general manager of Namco Ireland, said it was with great regret that he had made the announcement.
He explained that market sales in the commercial game products sector had seen a major decline, particularly in the last year.
He said the company would actively work with the Government to market the facility to potential investors.
Japanese-owned Namco purchased the plant three years ago from Atari when that company faced closure.
The Tanaiste, Ms Mary Harney, said she had instructed the IDA and Enterprise Ireland to focus their efforts in finding a replacement industry for Tipperary.
She was "very confident" the Government agencies would find a replacement industry.