A Walt Disney (DIS) spokesman confirmed the layoffs Thursday.
The move narrows the company's focus on mobile and social games that use key Disney characters. Some games that Disney acquired when it bought social game maker Playdom in 2010 for $563 million, such as Sorority Life, will be discontinued.
It is also discontinuing one-time hits, such as music play-along game, Tap Tap Revenge.
Disney Interactive had long been a money-losing unit and last month posted only its third profitable quarter since results began being broken out in 2008,
The company shuffled the executive ranks at Disney Interactive in November. Co-president John Pleasants stepped down, leaving co-president Jimmy Pitaro with responsibility for the division.
In a statement Thursday, Disney said the restructuring was "difficult but necessary given our long-term strategy focused on sustainable profitability and innovation."
Shares of the Burbank, Calif., company added 37 cents to $83.05 in afternoon trading. Earlier in trading shares touched $83.42, an all-time high.