The department issued a statement Friday afternoon saying its permanent staff, 26 military personnel and 23 civilian workers will be heading home by next spring.
The RAF, which has been there since the 1950s, will leave behind a multimillion-dollar hangar and several buildings.
The Happy Valley-Goose Bay area has been home to NATO air force training exercises. German and Dutch forces announced last year they were also winding up operations in Labrador.
Leo Abbass, mayor of Happy Valley-Goose Bay, says the announcement brings "disappointment."
"That will be a big blow to the business community here ... [The British families] are also involved in a number of organizations and make great contributions to the community."
The British may still have a presence at the base. The U.K. government is negotiating to continue military exercises there, but supported by the Canadian Department of National Defence and private contractors.
"We're still talking with them about coming back," says Kit Holmwood, one of the people negotiating on behalf of Canada's Defence Department.
"They've had massive cutbacks again in the British budget. Once they are able to tell us whether they can and whether they've got the money and what operations they'll be doing, we'll be able to carry on."
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