The restructuring plan will see over 400 job cuts across all its US divisions, leaving the total headcount at 1,000.
MySpace, which was acquired by the Rupert Murdoch owned company for $580m in 2005, claims to have about 125 million users.
It has been hit by the growing popularity of rival networking sites Twitter and Facebook. The latter saw Microsoft take a $240m equity stake in the site two years ago.
In a statement, MySpace chief executive Owen Van Natta, says: “Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company.
“I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace.”
In May, MySpace appointed former AOL and Telegraph Group marketer Barry Flanigan has as its new marketing director UK.