Leaders took the decision after several high profile scandals involving founder Mark Driscoll.
"Following much prayer and lengthy discussion with Mars Hill's leadership, the board of Mars Hill has concluded that rather than remaining a centralized multi-site church with video-led teaching distributed to multiple locations, the best future for each of our existing local churches is for them to become autonomous self-governed entities," Pastor Dave Bruskas said.
The Seattle based Church had around 12,000 followers at one time but in recent months that has fallen dramatically leading to rumours of financial trouble.
Each of the organisation's churches will now have until January to establish themselves as independent 'new' churches or face being sold.
The announcement means several job losses at Mars Hill central office with the organisation pledging to pay redundancy money.
Any cash left from the winding down of the organisation will be gifted to the different congregations.
President of London School of Theology Dr Krish Kandiah has spoken about the Church in the past and told Premier it was 'really sad'.
He said: "I think lots of Christians are going to be damaged as a result but it does seem really sad that so many Christians are going to have to look for a new spiritual home.
"I don't think it does the reputation of the Gospel in the city of Seattle or even North America a service."
Pastor Dave Bruskas said: "Ultimately, the success of this plan, and the future viability of each of these new local churches rest solely on all of us continuing to be faithful in supporting Jesus' mission through our attendance and continued giving.
"Mars Hill Church has never been about a building or even an organization.
"Mars Hill is a people on mission with Jesus, and that singular focus continues as these newly independent churches are launched.
"It's still all about Jesus!"
Dr Kandiah said it was likely Mars Hill leaders had been left with no option but to dissolve the Church.
He added: "I'm sure if they could have thought of a way of keeping it open they would have done.
"But it probably wasn't their decision. I think the decisions were made a long time ago just by the way the Church was structured in the first place and maybe if better systems were in place of accountability and support maybe these things wouldn't have happened."