Humberside Police said disbanding the unit, based in Walkington, by March 2014 would save it Â£500,000 a year.
The force said the saving would allow it to maintain frontline services as it faces making savings of Â£30m by 2016.
Chief Constable Tim Hollis said the force would buy in mounted officers from other forces when needed for operational purposes.
The Humberside unit has only six horses and is one of the smallest mounted units in England.
Mr Hollis said: "I realise, of course, that the public and many officers and police staff, serving and retired, will regret the loss of a mounted section which has been an integral part of policing across Humberside for so many years.
"Personally, I share that sadness but we are in a period when sentiment has come up against austerity and hard decisions must be made."
He said the base at Walkington in East Yorkshire would be sold after the unit's disbandment.
A police force is to axe its mounted unit in order to cut costs.