The studio was founded in 1995 and is mostly recognised for its Age of Empires series of games, with the latest instalment in that set, the PC-exclusive Age of Empires III selling over two million copies.
Incentives have been given to some of the Ensemble staff involved with Halo Wars to remain with the company until the game is shipped, with the game currently set for an early release in 2009.
An official statement from Microsoft said: "Microsoft has decided to close Ensemble Studios following the completion of Halo Wars. After the closure, the Ensemble leadership team will form a new studio and has agreed to provide ongoing support for Halo Wars as well as work on other projects with Microsoft Game Studios
"This decision does not reflect at all on Ensemble's talent or the quality of Halo Wars. in fact, many people who have had a chance to test drive Halo Wars agree that it is on track to being a fantastic game. This was a fiscally-rooted decision that keeps MGS on its growth path."
Halo Wars is a strategy based game and allows gamers to direct legions of UNSC soldiers into battle.