Sixty seasonal workers have had their contracts terminated early and eight permanent staff have been made redundant at Surf Snowdonia in Dolgarrog, Conwy Valley.
The lagoon, which generates a man-made wave using new technology, suffered its third fault last week since it opened at the end of July.
Bosses have apologised to customers.
The lagoon was filled with more than six million gallons (33,000 cubic metres) of filtered rainwater for its opening but a fault led to it being emptied in August.
It was also shut for five days earlier in September due to a tear in the lagoon liner.
The latest fault is due to a "serious failure" of the main drive mechanism of the wave generating machinery which could take three months to repair.
Martin Ainscough, chairman of the Ainscough Group which owns Surf Snowdonia, said:  "This is a very disappointing day for us all at Surf Snowdonia, and we know it's especially difficult for our excellent staff and for all of the people who have booked to come surfing with us.
"During the winter closure period we will be making further investment in order to improve the surf lagoon and broaden our offer.
"Surf Snowdonia was always intended as a long term investment in our group and our extra investment over the winter will prove our absolute commitment to make Surf Snowdonia a success."
The attraction received Â£4m of Welsh government funding in 2014.
A Welsh government spokesman said: "We share the disappointment of the team at Surf Snowdonia, their customers and staff.
"This innovative attraction has proved so popular since its launch and we welcome the further investment over coming winter months and are assured the attraction will return even bigger and better in time for the 2016 season."
The facility is due to reopen next spring.
A new surf lagoon in north Wales has shut eight weeks early for the winter due to mechanical issues, bosses said.