Global prices have fallen by more than 60% since 2014.
The New Zealand-based company said in a  statement that the employment cuts were to result in savings of up to NZ$60m ($39m; Â£25m) per year.
The company said the measures were needed to remain strongly competitive in today's global dairy market.
"Reducing the number of roles in our business isn't about individual competency; it is about continually improving the way we deliver performance," said Fonterra chief executive Theo Spierings in a statement.
The layoffs are part of an ongoing business review and will come at a one off cost of NZ$12m - $15m, the company said.
Mr Spierings did not give a breakdown of which part of the business the job losses would be in.
Consultations on further restructuring measures were announced for August.
The dairy co-operative is the world's largest milk exporter and Fonterra products are popular across Asia, particularly in China.
The company's profits have been falling for nearly two years in the face of volatile dairy prices.
Shares dropped by 1% in Thursday trade.
The world's largest dairy producer, Fonterra, said it plans to cut 523 jobs in the face of tumbling dairy prices.