The restructuring of commands will see the headquarters that manage domestic, international and support operations merged into one structure.
Defence Minister Peter MacKay says the overhaul is built on some lessons learned from the Afghan, Libyan and Olympic operations.
MacKay says the new headquarters, known as Canadian Joint Operations Command, will be responsible for conducting all military missions at home and abroad at the best cost to taxpayers.
The consolidation will result in a 25 per cent reduction in the size of defence command-and-control overhead — something described as a necessity in a review report by last year by the former head of the army, retired lieutenant-general Andrew Leslie.
Precisely how many job losses or retirements that will mean is unclear.
Leslie's report painted a picture of a military fat with administration and private contracting support.
The restructuring announcement was made by National Defence, which has been under fire for secrecy, in a late Friday afternoon news release.
The country's top military commander, Gen. Walt Natynczyk, says the changes will be phased in over several months.
"I'm committed to protecting Canada and Canada's interests in the world, working with our global and continental allies, along with our federal, provincial and regional partners here at home," the chief of the defence staff said in a statement.
"The implementation of the CJOC will result in a smaller, more efficient organization that will continue to deliver the same excellence in operational support to all of our people, at home and abroad. Furthermore, one command and control system will help us to deliver the capabilities required to face current conflicts and better plan for future global security challenges."
The command structure that's being torn down and replaced was initially designed by former defence chief, retired general Rick Hillier, to serve the post-9/11 military. It was implemented by Natynczyk, who after four years in the top military jobs is rumoured to be ready to retire.
Liberal Senator Colin Kenny says the Leslie report was almost a complete repudiation of Hillier's more muscular, American-style command system.
As part of Friday's release, the Defence Department announced a reshuffle in the navy, creating separate directorates to handle the glitch-plagued submarine fleet and other agencies to help smooth the introduction of new ships to the fleet.
The navy is also consolidating all five of its fleet training schools into one authority.
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