The job cuts make up about 10% of staff and the loss compares with a profit of $2.1bn in Q1 last year.
The results included $4.5bn in write-downs on sub-prime mortgage-backed investments and other high risk assets.
Merrill Lynch, which owns Mortgages PLC and Wave in the UK, has already reported write-downs of more than $24bn in previous quarters.
John Thain, chairman and chief executive officer of Merrill Lynch, says: “Despite this quarter’s loss, Merrill Lynch’s underlying businesses produced solid results in a difficult market environment.
“The firm’s $82bn excess liquidity pool has increased from year-end levels and we remain well capitalised. In addition, our global franchise is positioned strongly for the future, and we continue to invest in key growth areas and regions.”