Pupil numbers at Sunderland High School have dropped from more than 580 in 2006 to about 280, making it no longer financially viable.
The United Church Schools Trust, which runs the school, announced in January that despite its excellent reputation it had made a six figure loss.
Head Angela Slater described it as an "incredibly sad day".
In a letter to parents, the trust said it had made "strenuous efforts to cut costs without negatively impacting on the quality of education provided and to reverse the decline in numbers".
It had also explored "every other feasible option over several years including mergers, academisation and acquiring other schools in the area."
Ms Slater said: "Whilst this is obviously an incredibly sad day for the entire Sunderland High School family, we are determined to remain positive and to continue our celebration of the school's achievements and its significant legacy to the Sunderland community.
"It is clear that Sunderland High School will live on - not just in our memories, but through the lives and achievements of those who have studied and worked here, and who will carry the school's values forward".
Founded in 1884, in 2015 the school was named the 16th best Prep School in the UK by the Sunday Times and its alumni includes Kate Adie and the late Denise Robertson.
The closure is the latest upheaval in the private education sector in the North East, which includes the shutting of Akhurst, Eastcliffe, and La Sagesse schools, the merger of Central Newcastle High and Newcastle upon Tyne Church High, and Kings School in Tynemouth joining the state sector.
However, according to the Independent School Council's latest figures there are now 1,280 independent schools in the UK, compared to 1,271 in 2008.
A school that has taught children for more than 130 years is closing its doors for the final time.