Sunnyvale, California-based firm has announced it is closing its China office, cutting "around 350" jobs, as part of a worldwide consolidation aimed at cutting costs.
"We are constantly making changes to align resources, and to foster better collaboration and innovation across our business," Yahoo said in a statement.
Facing increasing competition from rivals like Google, Yahoo has been struggling to maintain profit growth. It has also been trying to adapt to consumers increasingly using mobile devices, which attract less advertising revenue.
In a response, Yahoo Chief Executive Marissa Mayer has made a series of acquisitions in a bid to diversify business and add new revenue streams.
Earlier this year, Yahoo also announced plans to spin off its stake in Alibaba, China's largest e-commerce company, which is valued at more than $30bn.
The tech giant also owns a lucrative stake in Yahoo Japan. At the end of 2014, Yahoo had a global workforce of about 12,500 workers.
Yahoo is not the first US company to finish operations in China.
"When you're as weak as Yahoo globally, it doesn't make sense to have a research and development arm in China since its too expensive,” says Shaun Rein, managing director of consultancy China Market Research.
In 2010 Google had to partially withdraw after clashing with Chinese authorities over censorship.
Earlier this year gamemaker Zynga closed its office and shed more than 70 jobs after its products failed to gain traction against local competition.
BBC News analyst Martin Patience says the move by the internet giant was not a huge surprise, as Yahoo has been rapidly retreating from the Chinese market. In 2013, it stopped offering services to email users in China.
It has had clashes with the Chinese
government. Controversially the firm handed over information to the
authorities that led to the jailing of two Chinese dissidents, says BBC.
However, according to reports, this closure was nothing to do with government pressure or censorship, but has been driven by the internet giant's desire to cut its global operating costs.
