Co-founder and chief executive Melanie Perkins broke the news in a note to the Sydney-based firm's roughly 5700 workers on Wednesday morning.
The restructure will affect 1271 people - or 22 per cent of the firm's headcount - either through cuts, redefined roles or relocations.
"This is without doubt the hardest moment in our thirteen-year history," Ms Perkins wrote in the note, which was also shared to the firm's website.
It comes amid concerns artificial intelligence will make cheaper and more accessible the services offered by major software companies.
Adam Barty, managing director at boutique advisory firm Revium, said the threat, for Canva, may prove inescapable.
"It's pretty hard not to view AI as an existential threat to Canva's core business model," he told AAP.
Job cuts are increasingly common in Australia's tech sector, as major players look to adjust to, or incorporate, the emerging technology.
In March, Atlassian trimmed its headcount by 1600, claiming AI had changed the software giant's skills mix and staffing needs.
Weeks earlier, software logistics firm WiseTech Global announced plans to cut about 2000 roles as part of an AI-fuelled efficiency drive.
It is not yet clear how many roles are set to go at Canva, with a spokesperson saying only the total 1271 figure included staff asked to relocate.
Canva's major venture backer Blackbird remains optimistic about its ability to harness the emerging technology.
"Its global reach, growing AI capabilities and strong product foundations put it in a good position to benefit from what AI makes possible," a spokesperson said.
"We've backed Canva since the very beginning and we remain optimistic about its future and long-term potential."
The company has looked to incorporate AI tools into its product suite, effectively bringing in-house the services offered by competing AI assistants.
But Mr Barty said it is conceivable the company's extensive user base may already be its main asset, rather than its products.
"The question then becomes how they can prevent that asset from atrophying in the face of expanded competition coming from AI labs and startups," he said.
Ms Perkins did not directly address artificial intelligence in her all-staff letter, but did link the restructure to a changing tech landscape.
"New technology is transforming what people can create, how they create it, and what they expect from the products they use," she said.
Once the jewel in the crown of Australia's start-up scene, Ms Perkins said tinkering around the edges would not suffice.
"This has been our hardest year yet," the chief executive said.
Canva will look to merge certain functions while making Sydney the primary home for its product teams.
Impacted staff will receive at least six months' salary, inclusive of entitlements and a year of continued healthcare coverage.
The firm will also offer grants of US$10,000 to support departing staff looking to launch businesses or give back to communities.
10°C