North Korea called South Korea's decision to stop operations and leave the jointly run Kaesong industrial zone on Thursday a declaration of war.
The North said the industrial zone is operated together by the rivals as a symbol of cooperation for more than a decade.
Dozens of South Korean trucks loaded with goods and equipment started to leave the zone early Thursday.
"Unpardonable is the puppet group's act of totally suspending the operation in (Kaesong), finding fault with the DPRK's H-bomb test and launch of a satellite," the North's Committee for the Peaceful Reunification of Korea said, referring to South Korea.
North Korea launched a long-range rocket on Sunday, carrying what it called a satellite, just weeks after a nuclear bomb test. The act was condemned by the United Nations.
The United States Senate also voted unanimously in favour of tougher sanctions on North Korea.
The South said North ordered South Koreans out of the zone by late afternoon, forbidding them to take anything other than personal belongings.
Halting activity at the park, where 124 South Korean companies employ about 55,000 North Koreans, cuts the last significant vestige of North-South cooperation - a rare opportunity for Koreans divided by the 1950-53 war to interact on a daily basis.
North Korean workers were given a taste of what life is like in the South during their time at the complex, about 54 km (34 miles) northwest of Seoul, including snack foods like Choco Pies and toiletries that were resold as luxury items in the North.
Both countries forbid their citizens to communicate with each other except at Kaesong.
"We piled up instant noodles, bread and drinks in our warehouse so North Korean workers could come here and eat freely," said Lee Jong ku, who runs a firm that installs electrical equipment for apparel factories in Kaesong. ,
"We don't mind them eating our food, because we only care about them working hard."
Top military officers from the United States, South Korea and Japan said they agreed at a meeting on Wednesday to step up information-sharing and coordination of security efforts in light of increasing North Korean nuclear and missile threats.
Meanwhile the North released a video on Thursday showing Kim Jong Un, North Korean president, travelling on his private jet to supervise preparations for Sunday's long-range rocket launch and provided a rare view of the country's newly upgraded space centre on the east coast.
A South Korean government official involved in North Korea policy said it was difficult to see how operations could be resumed anytime soon at Kaesong, which opened in 2005.
Shares of several leading companies operating in Kaesong, plunged during Thursday's trading, falling by nearly 10 percent or more. Defence shares, on the other hand, performed strongly.