The staff cuts are part of major restructuring measures that include a sell-off of most of the prison's 8481ha farm and forestry assets and closure of four aging Rangipo units housing up to 240 inmates.
The redevelopment of the Tongariro section as a low-security prison will include a small beef and sheep stock holding and land block.
Corrections' central regional commissioner Terry Buffery says the Rangipo units being closed by the end of the year range in age up to 55 years old and have come to the end of their useful life.
He says the redevelopment of a new transit hub, receiving office, gatehouse, trade training facilities and a secure perimeter will significantly lift the standard of the prison.
"While the prison will be smaller, the impact on staff will not be as great as first thought.
"This reflects the need to ensure we maximise the use of the new facilities and investment in security upgrades with a staffing model that matches."
The reduction in staff numbers is being achieved through non-replacement of existing vacancies at Tongariro/Rangipo, voluntary transfers to other prisons and an enhanced early retirement programme.
The reductions will be managed across the site rather than affecting just staff who currently work in the units signalled for closure.