Governors at the University of Plymouth have voted to close the Exmouth teacher training campus.
The faculty of education, also known as Rolle College, will now be transferred to Plymouth. The 4,000 students and 300 staff will move to the city in 2008.
About 300 students walked out of the meeting as the announcement was made on Friday afternoon.
The university says consolidating activity at its Plymouth base strengthens its work.
It is claimed moving the campus, known as Rolle College, will cost the local economy £20m.
Vice-Chancellor, Professor Roland Lewinsky, said: "In my view, this is a necessary development to help us achieve the mission of becoming an international centre of learning and research excellence serving the whole of the South West peninsula.
"We now have several years of hard work ahead to manage the relocation with the minimum disruption for our staff and students."
One mature student told the BBC the decision was a real blow.
"There will be no hope of me going to Plymouth, so they've taken away the chance for mature students to get a further education."