This could be the first of several rounds of cuts, CNN reported.
Yahoo's new CEO Scott Thompson, who joined the company in January, plans to provide more information about his strategy during the company's first-quarter earnings announcement, scheduled April 17.
In a written statement, Thompson said the cuts "are an important next step toward a bold, new Yahoo – smaller, nimbler, more profitable and better equipped to innovate."
Yahoo said its job cuts will save the company $375 million a year when they are completed. It expects to take a $125 million to $145 million charge this quarter for severance costs.
Yahoo has retained a massive user base, but has lost its edge in nearly every field to newer, nimbler rivals. The company gave up on search in 2009, and it's losing ground in display advertising to new entrants to the market such as Google and Facebook.