North Korea has announced that it will pull its more than 50,000 workers out of the Kaesong joint industrial zone with South Korea, cutting its last link with Seoul.
Kim Yang Gon, a senior ruling party official told the North's official Korean Central News Agency on Monday that all operations in the zone would be suspended while officials decided whether to re-open it or close it permanently.
The move follows mixed messages from Seoul earlier in the day about whether the North is preparing for a fourth nuclear test.
Unification Minister Ryoo Kihl-jae told lawmakers that there are signs of activity at the North's Punggye-ri nuclear test site. Later, South Korea's Defense Ministry said they have seen no such evidence.
Meanwhile, U.N. Secretary-General Ban Ki-moon, a South Korean, urged North Korea to refrain from "any further provocation." Speaking from The Hague, Mr. Ban said a fourth nuclear test would breach U.N. Security Council resolutions.
On Sunday, Kim Jang-soo - chief national security adviser to South Korean President Park Geun-hye - said a missile test or some other provocation could come on or near Wednesday, the date by which the North has suggested diplomats leave the capital, Pyongyang.
He said the North's real objective is to force diplomatic concessions from Washington and Seoul, but added that South Korea is maintaining its military readiness whether or not Pyongyang's threats "are merely rhetoric."
North Korea, angered by a new round of international sanctions following a recent nuclear test, has threatened to retaliate with attacks on the United States, South Korea and U.S. allies in the Asia Pacific region. The North Korean military command recently announced it was "authorized" to attack the United States using "smaller, lighter and diversified" nuclear weapons.
The escalating threats from Pyongyang have prompted several actions from South Korea and its allies.
On Monday, the commander of U.S. forces in South Korea, General James Thurman, canceled a scheduled trip to Washington to testify before several congressional committees this week, because the military says based on developments, it is prudent for Thurman to remain on the peninsula.
On Sunday, South Korea's top military officer postponed a meeting in Washington with the U.S. chairman of the joint chiefs of staff, because of the escalating tensions on the Korean peninsula.
U.S. Army General Martin Dempsey was to meet April 16 with his Seoul counterpart, General Jung Seung-jo. But a spokesman for South Korea's joint chiefs of staff said Seoul was concerned Pyongyang might stage a military provocation while General Jung was away.
Last week, the U.S. Defense Department postponed an intercontinental ballistic missile test from a U.S. Air Force base in California in order to not "exacerbate" military tensions with North Korea.
Defense Secretary Chuck Hagel decided to push back the long-planned "Minuteman 3" missile test until next month out of concern the launch could create misunderstanding with Pyongyang and heighten the current crisis.
North Korea will mark the 101st anniversary of the birth of its founding father, Kim Il Sung, on April 15 with pomp, ceremony and displays of military strength. Kim Il Sung led the communist country from 1948 until his death in 1994. His grandson, Kim Jong Un, currently holds power.