Harristown House addiction and counselling centre in Castlerea, Co Roscommon, is to close next month.
The residential unit has been in operation for 10 years and employs about 20 staff.
Staff were informed by the Probation and Welfare Service yesterday evening that the centre will close on 28 November.
Set up in 1998 beside Castlerea Prison, Harristown offers addiction treatment to young men who come through the courts.
It treats up to 100 people a year and is funded by the Probation and Welfare Service through a grant from the Department of Justice.
It costs around €475,000 to run the service each year.
IMPACT Assistant General Secretary Denis Rohan said Harristown House helped keep young people out of the prison system.
He described the decision as ludicrous and said he plans to discuss the closure with management and the Department of Justice in the coming days.
A department spokesman said that Harristown is one of around 60 centres subvented to the tune of €21m by the Probation Service.
Following an independent review, the department has decided to discontinue funding for Harristown.
However the Probation Service is looking at alternative means of delivering services for people involved.
