The company said the closure will eliminate the remaining 140 jobs at the plant.
The announcement is not surprising since the New York-based company said in January that it would lay off 660 workers at the plant. It warned then that the remaining jobs could be cut later.
The sterile manufacturing plant currently manufactures antibiotics, but company officials say demand for the drugs has been declining because of generic competition.
"This decision is not a reflection on our highly skilled colleagues nor on the community of Terre Haute," said Nat Ricciardi, president of Pfizer Global Manufacturing. "It's simply a business reality that we must address."
Plant workers will have access to internal job postings and career and retirement counseling, said Frank Foley, the Terre Haute plant site leader.
Severance benefits will be available for those who leave the company.
The plant used to manufacture the inhaled insulin Exubera. Pfizer had invested more than $300 million in the facility since 1999 as it ramped up production of Exubera. However, the drug never met expectations and Pfizer pulled the plug on it in October just months after expanding its sales effort beyond specialists to primary care doctors.
Local and state officials plan to work with the company to find a new use for the closing plant.
"We'll be doing whatever it takes to make sure it does not sit idle," said Rod Henry, president of the Terre Haute Chamber of Commerce. "As a community, we're resilient."