AAP had for decades provided media organisations first-account reports and breaking news on topics ranging from politics, to business and sports.
However, over time, the number of mastheads relying on the AAP newswire had dwindled, making the business unsustainable and prompting media shareholders Nine Entertainment Co Holdings and the Australian unit of News Corp to cut their ties.
"Its reporters, photographers and production staff have accurately recorded the first cut of contemporary Australian history and the nation is in their debt," AAP chairman Campbell Reid, who is also a News Corp executive, said in a statement.
"But eventually ?the number of organisations choosing to no longer rely on the AAP service has made the business unsustainable."
The closure will cost about 180 people their jobs, although AAP said both Nine and New Corp would offer some positions.
Pagemasters, AAP's editorial production service, which provided outsourced editing for publications, like the Sydney Morning Herald, will close in August.
An AAP spokesman was not available for comment.
Founded in 1935 by Keith Murdoch - father of Rupert Murdoch, the current CEO and Chairman of News Corp. - AAP's closure is one of the biggest casualties in Australia's shrinking media landscape.
"The unprecedented impact of the digital platforms that take other people's content and distribute it for free has led to too many companies choosing to no longer use AAP's professional service," AAP said in a statement.
(Reporting by Paulina Duran in Sydney; Editing by Simon Cameron-Moore)
By Paulina Duran