Almost 1,200 employees will be affected by the closure. The airline industry has been devastated by the coronavirus pandemic and Lufthansa is still considering a €9 billion government bailout.
Lufthansa's leisure subsidiary SunExpress Germany is to shut down, it was announced on Tuesday.
SunExpress is an operation conducted by Lufthansa and Turkish Airlines, along with two other airline operators, and employs roughly 1,200 people.
Read more: Germany: Solitary billionaire threatens Lufthansa bailout package
"Flight operations by SunExpress Germany, a subsidiary of Turkish SunExpress, will be ended shortly and an orderly liquidation process begun," a SunExpress spokesman said in a statement.
The spokesman added the leisure airline "will take on responsibility by working through possible solutions in the coming weeks with workers and social partners."
Outstanding flights with SunExpress will be transferred to its Turkish partner, Eurowings or other airlines and bookings already in place would automatically be altered.
Coronavirus fallout leads to potential bailout
The global coronavirus pandemic has hit the airline industry hard. Lufthansa is currently pondering a €9 billion ($10 billion) government bailout to ensure its survival. However, the deal is stalling as it has yet to be agreed by shareholders.
SunExpress has suffered greatly during the recent crisis with almost all its fleet grounded between April 2 and May 31.
From June 1, the leisure airline resumed domestic flights within Turkey, followed by international flights connecting other countries to Turkish holiday destinations.
SunExpress Germany was founded in June 2011 as a subsidiary of SunExpress and headquartered in Frankfurt am Main. The flight operations of SunExpress Germany focussed mainly on charter and holiday flights to holiday destinations out of Turkey.
Video: Coronavirus aftermath: Lufthansa bailout up in the air
jsi/rc (AFP, dpa)