Earlier this year, the charity - which gave young people with disabilities free opportunities in music, dance and performance - raised $165,000 in an emergency appeal.
But its financial problems continued and, in October, it scaled back its services.
The charity has been running for 20 years but has struggled over the last two years with rising living costs, increased operational expenses, and a significant drop in donations.
StarJam's board of trustees announced on Wednesday night it had laid off its workers and immediately ceased all its workshops and programmes.
"This is a heartbreaking decision, but it is the only responsible course of action given the financial instability," chief executive Gilli Sinclair said.
"We are incredibly grateful for the support from our Jammers, staff, volunteers, and donors over the years."
About 14 full-time staff members and 100 tutors have lost their jobs.
StarJam receives no Government money, relying on public and corporate donations to sustain its services.
"We cost about $130,000 a month for the 80 workshops across the country, so that was a long way to supporting us, but is unable to keep us with ongoing, sustainable support," Sinclair said.
"We are devastated, we are devastated for our staff, but particularly for our jammers, who love StarJam.
"We are so sorry it's ended this way.
"It's not a choice we would have willingly made, but I think the board has acted responsibly by looking at all options and making a very difficult decision."
The liquidation process will start once interim liquidators are appointed by the court. That was expected to happen early next week.
Employee entitlements, as well as the claims of all other creditors, would be determined at that time.
- By Geoff Sloan, made with the support of NZ On Air, and RNZ
