The Georgia Department of Corrections announced it will shut down Bostick State Prison in Milledgeville on May 1.
A news release said the closing would save the state about $6.7 million a year.
The prison houses medium-security and special-needs inmates.
The news release said Bostick's 131 staff members will be offered jobs at other correctional facilities, most within 50 miles' distance.
The state has already closed other correctional facilities in the Milledgeville area, costing the region several hundred jobs. In 2009, it shut down the Bill Ireland Youth Development Campus, and Scott State Prison in Hardwick. In 2008, it closed Rivers State Prison.
The Corrections Department news release said Bostick State Prison is considered a "non-enduring" facility because it lacks the safety features of other state prisons and requires more staff to secure.
Corrections commissioner Brian Owens said in the release: "While budget cuts are the result of this closure, the first priority for the Department is to maintain safe and secure prisons."
State Sen. Johnny Grant, a Milledgeville Republican, has said the state hopes to open a privately-operated prison next to Baldwin State Prison in south Milledgeville, providing about 235 jobs.
The region's job market has also been hit by layoffs at Shaw Industries and Rheem Manufacturing.
The U.S. Department of Labor says the number of people working in Baldwin County dropped by 149 in 2008, and then by 1,200 last year.