Tensions have escalated between the two Koreas in the wake of tests of nuclear and rocket systems. All contact has effectively been cut.
South Korea shut off the power and water supply to the Kaesong industrial park in North Korea on Friday, a day after the North moved to confiscate assets of companies operating there and kicked out the South's workers.
The industrial park had operated for more than a decade as a rare sign of cooperation between the two Koreas, employing more than 50,000 workers from the North in more than 100 factories.
South Korea said on Wednesday it was suspending operations at the park in response to a North Korean nuclear test last month and a rocket launch on Sunday.
The South's announcement it would withdraw staff triggered a retaliatory response from Pyongyang. North Korea put the industrial park under military control and ordered some 280 South Korean staff to leave late on Thursday.
Pyongyang also said that it was cutting off two military hotlines to South Korea.
The industrial park was one of the few areas of cooperation between the North and South, which are officially still at war.
Using typically bellicose language, the North said the South's suspension amounted to "an end to the last lifeline of north-south relations" and "a dangerous declaration of war."
The industrial park gave a rare glimpse of the life in the South to low-wage North Korean workers and provided valuable foreign currency to the North.
The United States, Japan and South Korea said the rocket launch and the nuclear test were in violation of UN Security Council resolutions and have sought tougher sanctions in response.
cw/sms (AP, dpa, Reuters)