Dartington Arts College in Totnes is to merge with University College Falmouth, governors have agreed.
The principal said the college was going through 'full blown grief'
Students lay down in protest outside the college boardroom as governors met to consider their decision.
They say the essence of the college comes from its relationship with the trust that runs the 850-acre estate.
But the governors say it can no longer afford to stay at the Dartington Estate and a merger with Falmouth would suit both colleges.
The board said in a statement: "There is here a once in a lifetime opportunity to create a new specialist University of the arts in and for the South West region.
"This would provide an international centre for research, learning and teaching, creative enterprise and entrepreneurship in art, design, media and performance."
It added: "The board recognises the importance to its local community of a continuing programme of arts activity at Dartington and has confidence that the college will indeed maintain an active, long-term association with its place of origin."
Many of the college's 680 students have objected to the move.
Speaking after the announcement, student Emily Kennedy-Barnes, said: "It is really sad. I think it's affected the whole student body really badly.
"Everyone's grieving a lot, everyone's really upset. I'm glad that we have protested and tried to fight for our college, it's what we believe in, we love this place."
The college says its long-term future will be guaranteed
College Principal Andrew Brewerton said: "What we have been through at the past through weeks and months has been full-blown grief. We are trying to live through that process and also to find a basis for a future at the same time.
"It has been very difficult for students especially but also for staff to work with the realisation that something has got to happen."
Totnes has been home to the college since 1961.
The estate where the college is based is owned by the Dartington Hall Trust which leases buildings to the college, one of the smallest of its kind in the UK.
But there is limited student accommodation available at Dartington and the college says a move to Falmouth will preserve its long-term future.