The cuts come ahead of the arrival of new chief executive Julien Billot, a 20-year veteran of digital media businesses who will take over in January.
The majority of the roughly 300 positions being eliminated will be phased out by the end of this year, with the rest to be gone by early 2014.
"To ensure we're positioned to accelerate digital revenue growth, we have made the difficult decision to change the dynamics of our workforce," chief financial officer Ginette Maille said in a news release on Tuesday.
Wherever possible, employees affected by the layoffs will be considered for open positions in other areas, Maille said.
Yellow Media said the layoffs will affect its offices across Canada, including its head office in Montreal.
As Yellow Media offers more online advertising services to businesses, it has already hired about 175 people for information technology and digital media jobs and plans to expand these areas.
The phone book publisher is trying find its place in an Internet-based marketplace where search engines, such as Google, Yahoo! and Bing have eaten into the need for paper directories.
Yellow Media also has expanded its services from business listings to digital services, including producing videos and building websites for small- and medium-sized businesses.
In addition, Yellow Media (TSX:YLO) made job cuts at its Vancouver-based Canpages directories in 2012, but didn't disclose the number of layoffs.
The company has said digital income makes up 43 per cent of its revenues. It had 283,000 advertisers as of Sept. 30, compared with 319,000 in the same period in 2012.
RBC Capital Markets analyst Andrew Calder said Yellow Media is expected to have restructuring charges of about $25 million to $30 million in its fourth-quarter related to the layoffs.
"The savings from the restructuring will help Yellow Media fund its hiring and investment efforts in the digital business, and so will not all fall to the bottom line," Calder said in a research note.
Billot will take over as chief executive on Jan. 1. The 45-year-old was most recently head of the media section of France's Solocal Group, formerly PagesJaunes Groupe. Prior to joining Solocal, Billot was CEO of Lagardere Active's digital and new business group.
Billot succeeds Marc Tellier, who held the post from 2001 until he departed in August.