Ford's board of directors approved ending the brand Wednesday morning. Ford plans to make up for the lost sales by expanding its luxury Lincoln brand.
Mercury sold just over 92,000 vehicles last year.
"We have made tremendous progress on profitably growing the Ford brand during the past few years. Now, it is time to do the same for Lincoln," said Mark Fields, Ford's president of The Americas, in a press release.
Ford has 1,712 dealerships currently selling Mercurys. Some will continue selling Lincolns and Fords and some could be consolidated into existing Ford dealerships.
Ford didn't say how much it expects to pay to close the dealerships. But Americas President Mark Fields said the closure doesn't affect the company's forecast that it will be solidly profitable in 2010.
Owners and dealers will reportedly receive information about care and maintanance and service support for Mercury products.
Ford says it doesn't plan to lay off any workers at its Dearborn, Mich., headquarters.
"We are 100 percent committed to supporting Mercury owners through Ford and Lincoln dealerships and working hard to keep them as valued customers in the future," Fields said in a statement. "At the same time, we will work closely with our dealers to phase out Mercury franchises and continue to build a healthy, growing Lincoln with strong new products and a profitable dealer network that delivers a world-class customer experience."