AgResearch is disbanding its possum control group at the Invermay facility near Dunedin.
The Crown Research Institute says vertebrate pest control is no longer in its mandate, so it will end its efforts to find an alternative to the poison 1080 for controlling possums.
Three people will lose their jobs as a result of the closure.
AgResearch's manager of applied biotechnology, Dr Jimmy Suttie, says all work produced by the possum control group to date will be published for other researchers to pick up.
The Green Party says ending the programme at Invermay is a backwards step in efforts to control tuberculosis in livestock.
It says the Invermay Research Station had identified 60 different possum-specific toxins that would kill possums but leave other animals unharmed, and was in the process of selecting the most effective ones for trial and use in the field.
However the Animal Health Board says the closure does not spell an end to this line of work.
TB eradication and research manager Paul Livingstone says other research organisations are looking at alternatives to 1080.