The news puts an end to months of speculation about the future of the channel, which is understood to have incurred losses of more than £20m in just over three years. It will close at the end of April.
Littlewoods, which is the majority owner with a 65% shareholding, said the channel, which launched in 1998, was failing to live up to shareholder expectations.
Susan Murray, chairman of Shop! and sales and marketing director of Littlewoods, said: "Recent changes in Littlewoods' senior management have led to a renewed focus on the core business and new channels such as e-commerce, which can provide sustainable income and profit growth.
"While e-commerce is achieving growth with profit potential, our review has concluded that Shop! will not meet its shareholders' expectations."
The closure of Shop! follows the folding of Granada's joint venture digital channel Wellbeing, which it owned with Boots, and Granada Breeze, a joint venture with Sky.
The decision to close Shop! will put the future of Granada's Liverpool-based Albert Dock in doubt, where the channel was filmed. It was also home to ITV's flagship daytime TV ratings juggernaut 'This Morning', in the early days of Richard Madeley and Judy Finnegan, before the show moved to London.
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