The job cuts at the Sydney-based company represent almost one fifth of its 10,000 staff, spokesman Brad Hatch said.
Fairfax said that its The Sydney Morning Herald and The Age broadsheet newspapers will become tabloids and their websites will introduce pay walls from early next year.
Fairfax owns more than 300 newspapers, 50 websites and 15 radio stations in Australia and New Zealand.
Australian staff were told in a memo that 300 jobs would be shed within three months in the cities of Sydney, Melbourne, Canberra, Brisbane and Perth. Half of these jobs would be editorial.
But the company's New Zealand CEO said the changes won't affect Fairfax's 2,500 employees there. Nor were there any plans to introduce pay walls for New Zealand newspaper websites.
Australia's largest newspaper publisher after News Corp. also said it would close two printing plants in Sydney and Melbourne by June 2014.
Both sites have printing presses with significant surplus capacity which is no longer required, Fairfax said.
"Readers' behaviours have changed and will not change back," chief executive Greg Hywood said in a statement. "As a result, we are taking decisive actions to fundamentally change the way we do business."
Hywood said Fairfax devised the changes after considering the merits of a range of alternatives, including splitting the company into its separate businesses.
"The package of strategic initiatives is bold, and several are difficult, particularly as they will impact on some of our people," he said
"However, we believe that they are in the best interests of Fairfax, our shareholders, and ultimately the majority of our people," he said.
The restructuring will have a one-off cost of about 248 million Australian dollars ($251 million), and result in annual savings of AU$235 million from June 2014.
Fairfax shares rose more than 4 per cent to 63 Australian cents in Sydney after the announcement.
In New Zealand, the stock market on Monday morning temporarily halted trading in shares of Trade Me, an online auction site that is majority owned by Fairfax, while Fairfax sold part of its stake.
Trade Me company secretary Linda Cox said in a statement that Fairfax sold 15 per cent of the company to a range of institutional investors at a 3.2 per cent discount to the closing price on Friday.
Fairfax raised about AU$160 million from the sale, and retains a 51 per cent stake in Trade Me.
Allen Williams, the chief executive of Fairfax's New Zealand operations, said Monday's announcement won't affect the company's 2,500 New Zealand employees.
There are no plans to shift Fairfax's New Zealand broadsheet newspapers to tabloid formats or introduce website pay walls, he said.
Fairfax owns more than 70 New Zealand daily and community newspapers, as well as more than 25 magazines and a number of websites.
"The announcement today is totally around what's happening to the Australian operations," Williams said.
He said Fairfax New Zealand has been "ahead of the curve" in implementing changes like centralized copy editing and printing rationalization.
Associated Press writer Nick Perry in Wellington, New Zealand, contributed to this report.