The Communist Youth League (CYL) has long been a proving ground for up-and-comers to demonstrate their political talent, particularly those who are not "princelings" with the advantage of high-ranking parents, like President Xi Jinping.
It has produced some of the country's top leaders, including Xi's presidential predecessor Hu Jintao as well as Li, and its alumni are seen as a leading faction within the Communist Party.
The Party's central committee published a plan to downsize the CYL's central and provincial committees and move more staff to "areas which directly serve the country's youth", state media reported late Tuesday.
The CYL had 87 million members at the end of 2015, official news agency Xinhua said, making it around the same size as the party itself.
Signs of a crackdown have been looming for months, with analysts noting a seemingly constant stream of criticism from elements of its parent organisation.
"Xi Jinping despises the entire Youth League faction, so you have the current prime minister Li Keqiang being sidelined, marginalised," said Willy Lam, expert on politics at the Chinese University of Hong Kong.
The CYL was formed in 1920 to promote Communist ideology to young people between the ages of 14 and 28, and has historically been more reformist than conservative.
Xi himself criticised it last July, blasting its leaders for being too "aristocratic," even though he comes from so-called "red nobility". His father was a Communist military leader and later senior official.
In April, the Party's internal corruption watchdog, the Central Commission for Discipline Inspection (CCDI), took the group to task for losing sight of its core mission to guide young people's ideological development.
The CCDI published an extensive self-criticism by the CYL's central committee, acknowledging that it must have a greater "sense of responsibility and mission" to the party leadership.
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