Staff were informed of the decision at a meeting in Malmö on Monday morning.
"We had a meeting with all of our employees where the CEO (Kazuo Hirai) presented the structural changes from April 1st," Sony Mobile's chief executive in Sweden, Bengt Arne Molin, told reporters at a press conference on Monday afternoon.
"It has to be done even though it is painful and difficult for many to accept. But we will still be among the largest employers in the region and one of Sweden's leading hi-tech companies."
"Sony's future is at stake, we need to be profitable over the longer term," he added.
The 2,200 people working at the facility in Lund, including 400 consultants, will now be cut to 1,200.
"The decision was not altogether surprising," employee Bitte Hansson said to regional daily Sydsvenskan earlier on Monday.
Seved Andersson, vice chairman for engineers' union Sveriges Ingenjörer, told Swedish news agency TT that silence fell in the room when the layoffs were announced.
"We had expected layoffs, but I think the number surprised many. It feels that way, at least judging by reactions," he said.
Sony Mobile and the unions are now set to initiate negotiations, a process that is expected to take months.
A press release from Sony Mobile on Monday read: "To create long term profitability Sony Mobile has made a decision regarding a new organizational structure from April 1st, 2015. The goal is to create a more operationally efficient and fast-moving organization."
The news follows a long period of turmoil for Sony Mobile, which has struggled to compete with market leaders Apple and Samsung.
400 people lost their jobs at the Lund facility in 2013, after Sony Corporation bought Swedish firm Ericsson's share of Sony Ericsson in 2012 and changed its name to Sony Mobile Communications.
About a month ago the company announced it was cutting 2,100 jobs worldwide – about 30 percent of its total workforce – to drag its results out of the red. The mobile and tablet maker lost $1.2 billion in the fourth quarter of 2014 alone.