North Korea has withdrawn from the inter-Korean liaison office which was opened amid a warming of ties last year to facilitate talks with the South.
Seoul said it was contacted on Friday and informed that the North’s staff would be leaving later in the day.
It has expressed its regret at the decision and is urging staff from the North to return as soon as possible.
The two Koreas have not met since a failed summit last month between the US and North Korean leaders.
The liaison office, located in the North Korean border city of Kaesong, had allowed officials from North and South Korea to communicate on a regular basis for the first time since the Korean War. It is meant to be staffed by up to 20 people from each side.
The BBC’s Laura Bicker in Seoul says South Korean President Moon Jae-in had hoped his diplomatic relationship with North Korean leader Kim Jong-un had progressed far enough to withstand any issues between the North and the US. It appears that Pyongyang did not feel the same.
Seoul had hoped to act as an intermediary between Mr Trump and Mr Kim. The fact that Pyongyang is not even willing to have staff in the same office as South Korea right now does not bode well, our correspondent says.
Since last month’s failed summit in Vietnam between the US and North Korean leaders, Pyongyang has warned that it could resume missile and nuclear testing.
Vice Foreign Minister Choe Son-hui said earlier this month that Washington threw away “a golden opportunity” at the summit.
President Trump had said at the time that Mr Kim had asked for the removal of all sanctions – which the US could not agree to. But Ms Choe said that the North had only asked for five key economic sanctions to be lifted.
US officials have insisted that diplomacy is still “alive”.