North Korea has said it is to recall 51,000 North Korean workers and suspend operations at a factory complex which is the last major symbol of co-operation with its southern rival.
Pyongyang's statement comes amid weeks of war threats and other efforts to punish South Korea and the US for ongoing joint military drills.
North Korea is also angry over the US-led push for UN sanctions over its February 12 nuclear test.
The Kaesong complex combines cheap North Korean labour and South Korean know-how and technology. It is the last remaining inter-Korean rapprochement projects from previous eras of co-operation.
But many of the about 120 South Korean companies at Kaesong have recently faced serious challenges as North Korea has barred South Koreans and supply trucks from entering the complex for days.