KPMG South Africa said the changes follow recent client losses after a corruption scandal, and was taking into account the current levels of demand for its services.
It expects up to 400 people leaving the firm as part of plans to close certain regional offices, and will scale back its internal business support to reflect its reduced footprint.
The Big Four's South African arm has been in the spotlight since last year due to work done for a company owned by the Gupta family, who have been accused of using their ties to former President Jacob Zuma to hold sway over government decisions.
In mid-April South Africa's auditor general stripped KPMG of all its central contracts amid allegations of wrongdoing by some of the firm's partners.
And last month, Barclays Africa withdrew its recommendation to reappoint KPMG as one of two joint auditors.
Today, KPMG South Africa expects the business to operate out of four hubs in the future - Johannesburg, Cape Town, Durban and Port Elizabeth.
Nhlamulo Dlomu, chief executive of KPMG South Africa, said:
These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support. We are putting quality and integrity at the heart of the business and, from now on, the firm will be focused on doing fewer things better. I am confident that we have taken the right steps to reform and reshape the business. Now we need time for these to take hold.
It is a matter of great regret that, as a result, we will be parting company with loyal colleagues. We are taking all possible steps to ensure these changes are managed in a caring manner and that everyone is treated with dignity.
KPMG said its business in South Africa will remain "of significant scale" with more than 130 partners and 2,200 employees.
Professor Wiseman Nkuhlu, chairman of KPMG South Africa, said: "The steps we have taken will enable us to best service the needs of clients, make a broader contribution to society, while establishing the platform that will allow us to again earn the right to grow in South Africa."