The collapse, confirmed on Monday after it was first reported by Sky News, was blamed on the “extremely challenging” retail environment.
It is the biggest chain by number of employees this year to fall into insolvency, just over three months after the same fate befell Maplin and Toys R Us.
Deloitte, which had been coordinating efforts to find a solvent deal, will oversee the administration process for the business, which is based in Normanton, West Yorkshire.
A source told Sky News that discussions about a rescue deal between Poundworld’s owner, TPG Capital, and Rcapital, had fallen apart over the weekend, days after a bid from Alteri Investors, another turnaround company, had also been terminated.
There remains optimism that a proportion of the chain’s staff will avoid losing their jobs if buyers can be found for part of the business during the administration process.
Other retailers are expected to pick off parts of its 355-strong store estate, while a slimmed-down Poundworld operation may also be viable.
In a statement confirming administration, Deloitte said the chain had suffered from high-cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market.
Joint administrator Clare Boardman said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.
“Unfortunately, this has not been possible.
“We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen.”
A TPG spokesperson said it was a “difficult decision for every party involved”.
“Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.”
The collapse is the latest grim development for the high street.
House of Fraser last week announced plans to close 31 of its 59 stores in a plan to rescue the business that will cost 6,000 jobs.
Carpetright, Marks & Spencer, Mothercare and New Look are among the other retailers which have announced major store closure programmes this year.