The business was established in March last year as a stand-alone company selling advertising on third party websites to external clients.
C4 brought it in-house in July this year and ran it alongside its New Media Ad sales division, which will now focus all of its sales efforts on core digital assets 4oD, channel4.com and e4.com.
C4 closed the agency as part of wider efficiency measures at the group, which will see headcount reduced by around 150 posts- or 15% of the workforce - across this year and next.
Up to 10 4DS staff are now in consultation about possible redeployment in the group.
Andy Barnes, Channel 4's sales director, said: “Naturally I am sad to announce the closure of 4DS which has performed well since its launch. However, given the exceptionally difficult economic conditions, it is right that we focus efforts on making sure our own assets perform as strongly as possible, rather than concentrating on the performance of third party websites.”