The Anchorage Park branch is one of 81 nationally which have been taken over by administrators.
Kroll, the firm appointed to oversee the process, said the shop's future had still not yet been decided.
But the store in Quartremaine Road, Hilsea, has now begun a cut-price 'closing-down sale' with the future of its nine staff looking uncertain.
A Kroll spokeswoman said: 'Like all the other MFI stores in administration, Portsmouth is one where our administratiors will be considering a range of options for the store. At the moment we are unable to say whether the store will definitely close.'
A deal last week saw MFI rescue 106 of its stores nationwide, including the branch in Southampton Road, Titchfield.
This means all existing customer orders from all stores will be honoured.
Kroll said it was currently in discussions with 'a number of potential purchasers' for the 81 stores in administration.
'We appreciate that this is a concerning time for employees and customers alike and are grateful for the patience and cooperation of those affected,' said Fraser Gray, a partner in the firm.
Shoppers and business leaders today expressed their concern at the furniture giant's demise.
Maureen Frost, chief executive of the Portsmouth and South East Hampshire Chamber of Commerce, said: 'This is not surprising.
'Retail is one sector that is struggling.
'The current financial situation is affecting consumers far more than businesses.
'The business sector isn't feeling the pinch too much at the moment, but if you are relying on consumers you are more vulnerable.
'I think it's a knock-on effect from the property market –- people aren't moving house so they aren't buying furniture and putting up kitchens.
'It's no surprise.'
Customer Lesley Powis, 26, from Paulsgrove, said: 'I think this is part of the credit crunch and things will get worse before they get better.