The Colman's Mustard factory in Norwich will close in 2019, with production moving to Burton-upon-Trent and Germany.
Unilever, which owns the facility, said all 113 jobs at the Carrow Works site will be affected and 45 people could be made redundant.
While part of the production will move out of the county, the packing of mustard powder and the milling of the seed will remain in the Norwich area.
The company said it will be processed at a new facility created through a partnership with local farmers.
Around 43 roles will transfer to Burton-upon-Trent and the remaining 25 will go to the new milling plant.
Unilever said the Norwich factory will close at the end of 2019, with a phased transfer of production beginning this year.
Colman's Mustard has been manufactured at Carrow Works on Bracondale since 1858. Sir Timothy Colman, great-grandson of Jeremiah James Colman, who brought the factory to Norwich, described the news as 'very sad indeed'.
The announcement comes less than a month after Britvic confirmed its factory, which is also at the Carrow Works site, was also closing.
Its plant, which produces Robinsons and Fruit Shoot, is due to shut in 2019, with manufacturing moving to Rugby, east London and Leeds.
The combined closures will result in a loss of 343 jobs in Norwich.
Jon Strachan, Unilever's vice president of supply chain, said he recognised the decision will be 'difficult news' for employees on site.
He said the proposals were the end product of a 16-week review and gave the 'best overall business case' for the company.
While the factory will close, he said the creation of a new milling facility will maintain the historic link between Norwich and the Colman's brand.
He confirmed the 'Colman's of Norwich' branding will remain on the jars.
Mr Strachan said a site for the new facility is yet to be chosen, but added the proposed food hub near Easton was one being looked at.
'There a couple of locations that are being explored, but it is up to the consortium to decide where the ultimate locations is,' he said.
'One way we have been engaging with this particular proposal is that we can play a part in facilitating the creation of a food hub.'
Mr Strachan said Unilever would be investing 'millions' in the new Norwich plant.
The company confirmed it will also continue to source mint and mustard locally.
However, the 'vast majority' of Unilever's other products will move predominantly to Burton-upon-Trent for manufacturing.
Meanwhile, its packing of dry sauces will be absorbed by existing production lines and existing employees at a Unilever factory in Germany.
Mr Strachan said the company would 'very much like' to encourage employees to transfer to the new Burton site.
He added that a relocation package would be part of ongoing consultations.
But a source within the factory said the transfer proposals were unrealistic.
The source said: 'People who work here have children in schools and partners in other jobs. It is not that easy to just transfer elsewhere.
'It is not like going to Thetford.'
The source said fully-costed counter proposals were put to Unilever last year in a bid to stop production moving out of Norfolk.
They included building a factory on the A47, which the source said would have paid for itself in 10 years.
Norwich South MP Clive Lewis said: 'I am absolutely gutted for the workforce, gutted for Norwich and angry that these two corporations, Britvic and Unilever, came and took over Robinsons and Colman's to great fanfare about respecting the city and its heritage, and then 15 years later it means literally nothing.
'It is not just about those brands being iconic to Norwich, these are quality manufacturing jobs which are dying in this city.'
The Labour MP said many of the workers at the factory are over the age of 50, and will now 'struggle' to find a similar role with similar pay.
'For many, it will feel as though they are being thrown on to the job scrap heap.'
A petition by this newspaper to save both factories was signed by more than 11,000 people.
It was launched after Britvic and Unilever announced in October that their facilities could close.
Alan Waters, leader of Norwich City Council, said he was 'very disappointed' with the announcement.
He said discussions were now needed on the future of the site, which is identified for employment land in the local plan.
Mr Strachan from Unilever said it was 'far too early' to speculate what will happen with the site.
Meanwhile, a government spokesman said it was disappointed by the decision, adding it was a 'worrying time' for the company's staff.
Warren Kenny, regional secretary of the trade union GMB, said it will be asking what led the company to make the decision and whether there are alternatives 'that should and must be considered.'
Doug Field, chairman of New Anglia Local Enterprise Partnership, said: 'It is disappointing to learn that Colman's will be moving the bulk of its mustard production out of Norwich. Retaining the production and packing of mustard powder and milling will secure a number of jobs locally and a link to this well-known brand.
'We will now focus on supporting the workers into alternative employment and we will be offering support and advice to local supply chain companies.'
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