A bank spokesman said the growth of telephone and internet banking meant fewer customers were using the Laxey service on New Road.
It follows the closure of a 60-year-old service in the village of Kirk Michael in August 2012.
Managing Director, Bill Shimmins said there will be no redundancies when the Laxey branch closes on 10 January.
He added: "Closing a branch is not a decision we take lightly, however demand for our services in the village of Laxey has reduced, as customers choose alternative ways of banking, such as 24 hour online or mobile services.
"Customers will continue to receive a full branch banking service at Onchan or Ramsey branches."
It is thought the Isle of Man bank has had a branch in Laxey since about 1911.
The Isle of Man bank is to close another of its village sub-branches because of falling customer numbers.