News International announced the shut down Thursday. The Rupert Murdoch-owned tabloid sells close to 3 million copies a week.
The 168-year-old weekly newspaper has acknowledged hacking into the cellphones of politicians, royal aides and celebrities. However recent allegations say the tabloid also targeted victims, including missing children and grieving families.
Police say they are investigating approximately 4,000 names that the tabloid may have had access to. The scandal has cost the Sunday-only paper prestige and prompted dozens of companies to pull their ads.
James Murdoch, who heads European operations and is the son of Rupert Murdoch, said if the allegations were true, "it was inhuman and has no place in our company."
"Wrongdoers turned a good newsroom bad," he said, "and this was not fully understood or adequately pursued."
James Murdoch said in a memo to staff that all revenue from the final issue, which will carry no ads, would go to "good causes."
The Associated Press contributed to this story