Earlier this month the Redmond, Washington based software giant announced it would sell the Nokia handset business for a measly $350m (£238m) to FIH Mobile, a subsidiary of Taiwanese gadget maker Foxconn.
Microsoft acquired it business in 2014 for $7.2bn. Last year the company cut 7,800 jobs to refocus its phone efforts, writing off $7.6bn.
Microsoft will take a $950m hit as a result of todays layoffs, of which it reckons $200m will go to severance payouts.
Satya Nadella, chief executive, said:
We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same. We will continue to innovate across devices and on our cloud services across all mobile platforms.
Microsoft expects the layoffs to be mostly complete by the end of 2016.
The move was seen largely as a mistake and was conceived by previous chief executive Steve Ballmer.
Existing boss Nadella has never prioritised the mobile phone handset business since he took over in 2014.
Microsoft reported a dip in mobile revenue of 46 per cent in its most recent quarter. It sold 2.3m Lumias over the past three months, down 73 per cent from the same period last year.
The software giant will continue to produce its range of Surface tablets that it is betting will become one of its leading revenue streams and there is speculation that it could announce a Surface phone.