The Kainai (KIGH-NIGH) Corrections Society minimum-security facility in Standoff had been operating for 25 years.
It shut down its 24 beds for inmates last week and 12 people have lost their jobs.
Probation, court worker and crime prevention services, along with an elders program, are to continue.
The Justice Department tried to close the centre four years ago, but lobbying by officials from the Blood Tribe in southern Alberta managed to keep it open.
Rick Soup, director of the corrections centre, said the closure will have a big impact on Blood Tribe members.
"The workers who were here, some of them were here for 25 years," he said. "They dedicated their careers to corrections, so it's going to be quite an effect on them and their families.
"And the community really supported the facility so ... there's going to be a huge impact there as well."
The closure is also a blow because the centre was the only one in the province to offer programs solely for aboriginal offenders, Soup said.
"Of all the offenders in Alberta, 37 per cent are aboriginal ... and we were the only First Nations corrections facility on-reserve to help them."
Soup said the inmates will probably be moved into the general prison population at other facilities.
The Kainai society was created to serve members of the Blood Tribe, Treaty 7 and other First Nations who had become involved in the criminal justice system.