The Illawarra Reintegration Centre at Unanderra will close in early 2020, less than three years after it opened.
Berrima prison in the Southern Highlands will also shut as will correctional centres in Ivanhoe and Brewarrina, it was announced on Tuesday.
It is not known how many jobs will be lost from the closure of the Illawarra correctional centres, however the government has said they will do whatever is feasible to find staff other roles.
The minimum-security prison at Unanderra - which is still promoted as "new" on the NSW Corrective Services website - opened its doors in June 2017.
It can house up to 60 inmates, and was touted as the first of its kind, with a greater than usual focus on programs that will prepare inmates for life after prison.
In his release, the Corrections minister said the four prisons would be "retired" as "safer beds were available".
The closures have been triggered by the new 1700 bed Clarence Correctional Centre, along with the expansion of existing prisons in Junee, Bathurst, Cessnock, Mid North Coast, Parklea and Windsor.
The Unanderra jail and Berrima Correctional Centre will both close in early 2020.
More to come