Pyongyang has said it would shut down a factory that employs North and South Korean workers. The warning follows international skepticism of the seriousness of Kim Jong Un's war threats against the South.
A spokesman for the North's office in control of the Kaesong industrial complex said it would close if the South continued to "defame" it.
Even after the North threatened war, South Koreans who work at the Kaesong industrial zone in North Korea were able to cross the border on Saturday.
South Korea's Defense Ministry considered the open border a sign that the North Korean leader had once again issued empty threats. However, by late Saturday, a spokesman from the cooperative operation said the factory complex might close if Seoul continued insulting it.
"If the puppet traitor group continues to mention the fact Kaesong industrial zone is being kept operating and damages our dignity, it will be mercilessly shut off and shut down," a Kaesong spokesman said, according to the North's Korean Central News Agency (KCNA).
The Kaesong complex is an important source of hard currency for North Korea.
Earlier in the day, Kim Jong Un amplified aggressive rhetoric toward South Korea in a government statement by declaring that "all matters between the two Koreas will be handled according to wartime protocol," according the KCNA news agency. The threat came in response to joint US and South Korean military drills.
"The long-standing situation of the Korean peninsula being neither at peace nor at war is finally over," Kim said.
North Korea would launch a "nuclear war" if provoked by the US or South Korea, he said.
The neighboring countries declared a ceasefire in 1953, bringing the three-year Korean War to an end. However, because they failed to agree to a peace treaty, they have technically remained at war for nearly 60 years.
Kim's rhetoric 'not new'
While Seoul dismissed the idea of Pyongyong carrying out its threats of a military attack, the reaction from the international community was one of caution mixed with a bit of scepticism.
Russia's foreign ministry expressed the most concern on Saturday, urging all sides to consider the consequences of an armed conflict.
"Naturally, we cannot remain indifferent when an escalation of tensions is taking place at our eastern frontiers," Logvinov said. "We cannot but worry."
Following Kim's threats against the Washington on Friday and then Seoul on Saturday, US Defense Secretary Chuck Hagel said that the US wouldn't be deterred by the rhetoric and was ready to respond to "any eventuality."
But Germany's chief of the Federal Intelligence Service agreed with South Korea's reactions more so than with those of Russia and the US.
The belligerent language coming from the Northern leader was "not completely new," German intelligence chief Gerhard Schindler told the country's Sunday newspaper "Bild am Sonntag."
"To sum up: we assume that North Korea does not want a war."
An increased number of threats have emanated from Pyongyang in recent weeks, following an international row over the communist country's militaristic ambitions.
In December, North Korea successfully launched a long-range rocket. Less than two months later, it carried out its third nuclear test, resulting in the United Nations imposing tougher sanctions. In response, Kim Jong Un focused his attention on annual US-South Korean military drills, calling them a provocation and threat to his country's security.
kms/ rc (AFP, AP, Reuters, dpa)