Ulster University is cutting 210 jobs this year and 1,200 student places over the next three years due to a reduction in its funding.
The move is in response to an £8.6m cut in the subsidy received from the Department of Employment and Learning (DEL).
Prof Alastair Adair, the university's acting vice-chancellor, blamed the cuts on the Northern Ireland Executive.
"The executive is disinvesting in our young people," he said.
"We are competing at a national level, at international level, giving our students the best student experience, and having that undermined by failure to take decisions at Stormont."
Prof Deirdre Heenan, the university's pro-vice-chancellor, said "we are now presiding over a diminishing higher education sector" in Northern Ireland.
Stephen Farry, the DEL minister, acknowledged that the situation could worsen unless the continuing dispute over the Stormont budget was resolved.
Full-time undergraduate places will be cut by 250 in September, with a reduction of 950 further places during 2016 and 2017.
Job losses will be among both academic and non-academic staff, but the university is hoping no compulsory redundancies will be required.
Ulster University has seen its budget from DEL reduced from £89m in 2010-11 to a projected £70.7m for the coming academic year.
It was hit by an in-year cut of £3.1m in 2014-15 and now faces an additional cut of £5.5m.
The £70.7m for 2015-16 was described by Prof Adair as a "best case scenario", which could be reduced further if the executive cannot agree to implement a revised budget.
Over 40% of the university's funding comes from DEL.
There are currently about 26,000 students at Ulster University, but only about 13,000 are full-time undergraduates.
The cuts to student places will affect these full-time undergraduate places.
The university has a current intake of about 4,500 undergraduates per year, but this will come down to closer to 4,000 from September 2016.
Prof Adair said that none of the four campuses - in Belfast, Coleraine, Jordanstown and Magee College in Londonderry - was at risk, but that courses and subject areas will close.
A review is currently taking place to decide which of those will face the axe.
Prof Adair met with staff at all four campuses on Thursday to outline the reductions.
"This is the last place we want to be in," he said.
"The university can no longer absorb these levels of cuts."
"The implications of this are dire. We are exporting students, many of whom will never come back to Northern Ireland."
He also said that to avoid further cuts in staff and student numbers the executive would either have to give the two local universities more money or allow student fees to rise.
Prof Heenan said she didn't "think the penny has dropped" with politicians that "universities are a critical factor in growing any economy".
"Regions across the UK [and] all countries across the western world are investing in higher education," Prof Heenan said.
"We are an ambitious organisation with ambitious plans for growth, but unfortunately cuts of this magnitude mean it's unrealistic to talk about growth in these circumstances."
Mr Farry told BBC Radio Ulster's Evening Extra programme the possibility that student fees could rise was something that should be discussed.
"A choice has to be made - the current status quo is not sustainable," he said.
"But I wouldn't rule out that the executive would invest more money from our block grant.
"That means that we invest less in other areas or we raise revenue from others parts of our economy."
Full-time students from Northern Ireland currently pay £3,805 per year in fees if they study at Ulster University or Queen's University.
DEL's budget was reduced by £62m earlier this year, and its budget for higher education institutions fell from £203m to £186m, a reduction of 8.2%.
In April, Queen's University announced it was cutting 236 jobs and 1,010 student places over the next three years.