Ready At Dawn has been forced to cut 13 of its staff as the studio goes through a quiet period ahead of its next project "ramp up".
The news, posted on the company's official website, described the situation as part of "the woes of being independent" and wished those leaving the studio "the best of luck" in the future.
"Most days we feel privileged to do what we do," statement read. "Some days not so much. Today just plain sucks.
"We've spent the majority of our time at RAD hiring the best and most talented people to join our team. Today, we had to let go of 13 of these people because we simply couldn't keep them on board while one project finishes and another ramps up. Unfortunately, these are the woes of being independent...
"It sucks. There are no other words for it.
"We wanted to wish the best of luck to those guys and girls who have been a part of our crew. We sincerely hope that you will all land back on your feet real soon."
Ready At Dawn, based in Santa Ana, US, is best-known for Okami on the Wii and the conversion of God of War: Chains of Olympus to the PlayStation Portable.
It's latest project, Ghost of Sparta, is another game set in the God of War universe for Sony's handheld platform, while the company also announced that it would be making its internal game engine available for purchase by other developers late last year.