Around 55 staff are losing full-time positions at Driveclub creator Evolution Studios.
The numbers come from sources speaking to Eurogamer after staff were informed of the decision last Friday.
"We will be looking to relocate team members throughout the studios, but unfortunately some redundancies will be necessary and in those cases we will assist staff in any way we can," said Sony in a statement.
Driveclub launched last year after numerous delays but struggled to offer full service online. As a result, the promised PS Plus edition - a huge chunk of the game offered for free - has gone AWOL.
Sony said it was preparing the studio for layoffs last week. Evolution is one of Sony's Worldwide Studios.