The Roman Catholic archdiocese of Boston has said that it is to close one sixth of its parishes.
O'Malley took over after the sex scandal forced his predecessor out
Church officials say the move was prompted by declining congregations, a dwindling supply of priests and a shortage of funds.
The diocese has experienced a significant decrease in collections.
But it was a series of abuse scandals two years ago that proved most costly. Boston recently paid out $85m in compensation to sexual abuse victims.
Perhaps more importantly though, the scandal stripped the Catholic Church in America of much of its prestige and trust.
The Archbishop of Boston, Sean O'Malley, was insistent that the parish closures were not linked to the lawsuits.
He said that the massive payout to more than 500 victims of abuse at the hands of priests in the diocese had been fully covered by the recent sale of the archbishop's residences and surrounding land.
The archbishop said the reasons for the closures were three-fold: More than one-third of churches are in debt; the diocese is facing a staffing crisis with more than 130 priests aged over 70; and many churches and their buildings are dilapidated.
The Boston archdiocese is America's fourth-largest and home to two million Catholics.
The archbishop said 65 of the 357 parishes would close by the end of the year, with many churches and even a few schools shutting down.
"It means the loss of a spiritual home, the place where so much time and resources have been invested, the house where so many important moments in people's lives, from birth to death, have taken place," the archbishop said.
"I wish there was some way that all of these wonderful houses of life and prayer could remain open and alive and full. But there is not," he added.
Archbishop O'Malley said while he was aware of the emotional distress the closures would cause, it was still better than the long slow decline that would happen otherwise.
On Tuesday, each of the diocese's parishes received a letter telling them whether they were set to close or remain open.
But Archbishop O'Malley said it was not "a matter of winners and losers". "We are part of something bigger than ourselves," he said.
The BBC's religious affairs correspondent Robert Piggott says that other dioceses in the US have also been closing churches.
Some have pinned this on a decline in the number attending mass, brought about by a change in the ethnic make-up of city centres.
"The key is that in urban America, parishes were almost always ethnic parishes -- whether Italian, Polish, German, Irish and so forth," James Fisher, co-director of the Centre for American Catholic Studies at Fordham University, told Reuters.
"They became so identified with those ethnic communities that once the ethnic group no longer inhabited the neighbourhood, it threw the fate of the parish up in the air," he added.
According to our correspondent, the shift in population from city centres to suburbs is partly responsible.
But he says that across the country, the abuse scandal continues to have an impact, in reduced congregations, new compensation claims and the increased cost of insurance.