The redundancies will be made across each of the four Northern Ireland facilities - Larne, Belfast, Springvale and Monkstown.
The firm is moving production of its 400 series generator sets to Tianjin, China, to build the product closer to its growing customer base.
The announcement was made on Thursday by Caterpillar Inc. on behalf of FG Wilson, its wholly owned subsidiary, and it came as First Minister Peter Robinson and deputy First Minister Martin McGuinness headed a mini summit to discuss the worsening economy and Northern Ireland's unemployment rate of 8.2%.
The firm said they had made "a number of measures that will result in a more efficient and competitive business model."
Caterpillar Inc. said they were reviewing strategies to "improve its competitiveness."
"In addition, it is responding to dampened demand from Caterpillar's small generator set customers as a result of the ongoing Eurozone problems and the continuing financial uncertainty in the global economy.
"As a result of the evaluation of the small generator set business, announced in June, and adjusting production levels to better align with demand, Caterpillar is releasing up to approximately 760 people - a combination of salaried and production employees, as well as agency workers.
"To date approximately 170 agency workers included in that total have been released."
Robert Kennedy, Northern Ireland Operations Director, said: "We value our employees' contributions, and these actions are not a reflection of them, but rather of the business climate."
"We understand these decisions will be difficult for the lives of many of our workers and their families, and we genuinely regret that."
He continued: "We realise the announcements we're making affect a company that has a rich history in Northern Ireland.
"However, given our current structure and economic environment, portions of our portfolio are not competitive, and we need to react accordingly for long-term growth and to compete for industry leadership."
Mr Kennedy said that Caterpillar is committed to building the remaining business in Northern Ireland and to working closely with local government.
Alliance MLA Stewart Dickson has called on the Prime Minister to visit Northern Ireland immediately to address what is now a national economic blow.
The East Antrim politician has expressed his shock and sadness at the major job loss announcement.
"This is shocking news that will devastate many workers and their families. Many more will also be affected by the fall out, as job losses to this extent will have a knock-on effect on secondary companies and groups in the area."
He continued:"The landscape of Larne and Monkstown will be drastically altered forever, making this a national economic disaster."
"I am calling for the Prime Minister to meet with the Enterprise, Trade and Investment Minister immediately to ensure the correct support system is in place for all affected.
"He really should be in Northern Ireland today as local people try to come to terms with this news.
"These job loses clearly show how unstable the UK's economy remains. The Prime Minister and the Executive must act fast to stop other firms suffering the same fate."
Enterprise Minister Arlene Foster described the job losses as "a major blow to the Northern Ireland economy."
"This is devastating news for the hundreds of families who will be affected, particularly when so many people are already struggling in this difficult economic climate.
"I want to assure staff that, together with Invest NI and colleagues in the entire Northern Ireland Executive, we will do all that is possible to limit the impact of the redundancies," the Minister said.
Meanwhile, Unite the Union has reacted angrily to the news.
The union's regional secretary Jimmy Kelly, said: "The high-calibre job losses are a crushing blow to the East Antrim area and Northern Ireland.
"The company has not given its workers or their union representatives the opportunity to negotiate a plan which would have attempted to keep some of the affected workers employed," he claimed.
"Unite is still willing to sit down with the management and seek a way forward. The union and is calling these redundancies to be put on hold to see if we can at least find a way to reduce the number of job losses."