A total of 120 employees are expected to lose their jobs as a result including the plant management, but negotiations are ongoing with unions.
Vestas chief operating officer Jean-Marc Lechene said the move is part of "on-going adjustment of Vestas' global production capacity" towards "a leaner and more asset-light manufacturing organisation".
"We regret having to close down the factory in Taranto. However, matching Vestas' global manufacturing organisation with the market conditions is necessary for Vestas to remain competitive," he added.
The factory, which opened in 1998, assembles the nacelles for Vestas' V90-3MW turbine. It is located alongside the company's a blade facility, which will remain open.
The company said it is adapting to a slow-down in the wind power market in 2013 and expected slow growth in coming years.
Vestas has only made two sales in Italy in the year to date, totalling 96.4MW. By this point last year, the company had completed five sales with more than twice the capacity.
The company denied that a drop off in the Italian market is responsible for the decision, pointing to a global fall in demand.
Vestas failed to hit its own targets in the second quarter as its revenue slumped 26% to EUR 1.2 billion, while pre-tax loss extended to EUR 38 million from EUR 5 million a year ago.
This coincided with the departure of Ditlev Engel as CEO, to be replaced by Anders Runevad who has reiterated the company's commitment to streamlining the company's operations.