Sony was late to respond to the craze for digital music players
The job cuts, which represent about 7% of the company's workforce, will be achieved by March 2008, the firm said.
About 4,000 jobs will go in Japan, with the remaining 6,000 cuts overseas. The company will also close or sell 11 of its 65 manufacturing plants.
Sony, which now has its first-ever non-Japanese chairman, has been losing ground to rivals in key sectors.
The company that invented the Walkman has been humbled in the portable music market by Apple's iPod, while it has also been caught out by the shift from traditional cathode-ray tube televisions to flat screens.
Losses forecast
In its announcement, which came after the close of trading on the Tokyo stock market, Sony said it expected a group net loss of 10bn yen ($90 million) in the current fiscal year.
SONY'S WORKFORCE BY REGION Japan 41.1% N America 18% Europe 10.4% Africa/Mid-East/SE Asia 12.8% E Asia 15.6% Latin America 2.1% Source: Sony
Over the past five years, Sony shares have lost two thirds of their value. In Thursday's trading, its share price fell 2.2%.
Sony is the world's second-largest consumer electronics maker, the biggest being Matsushita. It has about 151,400 employees in 80 countries worldwide.
Its long-awaited restructuring plan follows the appointment in March of UK-born Sir Howard Stringer, the former head of its US operations, as the group's first foreign chief executive in its 59-year history.
Despite its setbacks, Sony has had success in its film division and with the PlayStation Portable games console.
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In a major restructuring plan, Sony announced that approximately 7% of their workforce will be laid off between now and March 2008. Nearly 4,000 of the job losses will be in Japan itself.

The plan to try and revitalise the company is the brainchild of Sir Howard Stringer, the company's first ever non-Japanese CEO.  Apart from the job losses, eleven of the company's 65 manufacturing plants will be closed or put up for sale.  Restructuring follows considerable stock price falls over the last five years with the share value reduced to less than 40% of the 2000 value.

As well as announcing restructing plans, Sony announced an expected loss of 10 billion yen (US$ 90 million) during the current financial year.