rhetoric with action as Washington condemns Pyongyang's "dangerous, reckless" behaviour.
Any move on the Seoul-funded Kaesong complex - established in 2004 and a crucial source of hard currency for North Korea - carries enormous significance and the potential to send tensions soaring.
Neither of the Koreas has allowed previous crises to significantly affect Kaesong, the only surviving example of inter-Korean co-operation and seen as a beacon for the stability of the Korean peninsula.
South Korea's defence ministry said on Wednesday it had contingency plans that included "military action" for ensuring the safety of hundreds of South Koreans currently working in the complex.
The latest North Korean move fits a cycle of escalating tensions that have seen Pyongyang threaten missile and nuclear strikes against the United States and its ally South Korea in response to UN sanctions and joint military drills.
UN chief Ban Ki-Moon warned on Tuesday that the situation had "gone too far".
South Korean officials said the North informed them on Wednesday morning it was stopping the daily movement of South Koreans into Kaesong - 10 kilometres on the North side of the border.
However, it would allow the 861 South Koreans currently there to leave, they said.
Describing the North's move as "very regrettable", Unification Ministry spokesman Kim Hyung-Suk called on the North to normalise movement to Kaesong "immediately".
It was not clear how long the access ban would remain in effect.
The ministry said 46 South Koreans were expected to return from Kaesong by the end of Wednesday, with hundreds opting to stay on to keep their companies running smoothly. Many of the South Koreans routinely stay for periods of several days.
Around 53,000 North Koreans work at 120 South Korean plants at the complex, which was still operating normally on Wednesday.
Lee Jae-Young, manager at a watchmaking plant in Kaesong, was among those prevented from crossing into the North on Wednesday.
"I feel anxious about my colleagues there. This is an emergency situation and it doesn't look good," Lee told AFP.
"This could also be serious trouble for our business which requires the constant shipping of raw materials to Kaesong for manufacturing," she added.
But Kim Dong-Kyu, a South Korean company manager still in Kaesong, was more relaxed.
"The atmosphere here is like, business as usual. It doesn't appear that the complex will be closed as far as I can tell," Kim said.
Cho Han-Bum, an analyst at the Korea Institute for National Unification, said Pyongyang was unlikely to risk a complete shutdown of Kaesong.
Tensions have been soaring on the Korean peninsula since the North launched a long-range rocket in December and conducted its third nuclear test in February. Both events triggered UN sanctions.
In a rare show of force in the region, Washington has deployed nuclear-capable US B-52s, B-2 stealth bombers and two US destroyers to South Korean air and sea space.
US Secretary of State John Kerry on Tuesday denounced the "unacceptable rhetoric" emanating from Pyongyang and North Korean leader Kim Jong-Un.
"What Kim Jong Un has been choosing to do is provocative. It is dangerous, reckless and the United States will not accept (North Korea) as a nuclear state," Kerry said.
