The Belfast-based newspaper Daily Ireland is to cease publication with the loss of up to 15 jobs.
Daily Ireland has folded after 20 months
The last edition of the paper, launched in February 2005, will be on Friday.
Managing director Mairtin O Muilleoir said the government's "refusal" to allow it to "tender for advertisements was a major factor in its collapse".
The government said it regretted the closure. It added that the paper was free to tender for advertisements but "chose" not to.
Daily Ireland reduced its daily coverage to five days earlier this year.
Paying tribute to staff, supporters and readers, Mr O Muilleoir said the newspaper had played a vital role in promoting the nationalist case "at a time when McCarthyism and anti-nationalist voices were in the ascendancy".
"We are very proud of the achievements of the Daily Ireland team over the past 20 months," he said.
"We hope we have inspired others to take up where we have left off and that this is more a time-out than an ending."
Daily Ireland has lodged a legal challenge to what it claims is the "refusal" of the NIO to advertise in the paper.
The Office of First and Deputy First Minister said the case would be "robustly" defended.
It added: "All government advertising is in line with approved equality schemes and Daily Ireland did receive government advertising.
"The tender for recruitment and classified advertising which is currently out in the marketplace is open to all daily newspapers circulating in Northern Ireland, including Daily Ireland."
The most recent Audit Bureau of Circulation figures show that Daily Ireland was selling 10,080 copies each day.
This compares with Belfast Telegraph sales of 90,827; Irish News 49,272 and News Letter, 28,293.
Daily Ireland is the second Belfast-based newspaper to fold within 16 months.
In May last year, the Daily View collapsed with the loss of 17 journalists' jobs after publishing for just five weeks.
Daily View, produced by Local Press Ltd, had been heralded as a cross-community newspaper.