CEO Jon Miller alerted employees of the pending cuts during a company-wide meeting Thursday, AOL spokesperson Trisha Wallace told internetnews.com.
Most of the job cuts are expected to be in AOL's dial-up customer support and services.
As of June 30, AOL counted 17.7 million U.S. subscribers, a decline of 976,000 from the prior quarter and 3.1 million from the year-ago quarter.
As a result, AOL revenues declined 2 percent ($51 million) to $2 billion because of an 11 percent decrease ($188 million) in subscription revenues.
The subscription revenue still generated $1.5 billion during this year's first quarter, but Time Warner President and COO Jeff Bewkes promised that cutting the slowing ISP business would mean $1 billion in savings by 2007.