More than 40 staff have been made redundant at 2K Czech, Develop reports.
Sources inside the company say that the redundancies are spread across 2K Czech's offices in Prague and Brno. However, the Prague office is believed to have lost less than ten people.
The job losses represent up to a quarter of 2K Czech's workforce, but Take-Two insists that the studio's remit to create "world class game titles" remains unchanged.
Take-Two released a written statement saying that 2K Czech has, "realigned its resources to streamline the development process, reduce costs and maximize studio performance."
"While this was a difficult decision, we believe it will benefit the studio in the long-term."
2K Czech was formed in 2008 after Take-Two bought Mafia developer Illusion Softworks. However, Mafia II was in development for around five years, and despite respectable sales it is uncertain whether the game proved to be profitable.
In July, core team members from 2K Czech formed a new studio, Warhorse, with veterans from Operation Flashpoint developer Bohemia Interactive.