South Korean officials have called an emergency security meeting following threats from the sister of the North's leader Kim Jong Un.
Kim Yo-jong threatened military action against the South and said Seoul will soon witness the collapse of a "useless" inter-Korean liaison office on the countries' border.
There are concerns Pyongyang could opt for provocation to strengthen internal unity and look for external concessions as nuclear talks with the US are still deadlocked.
Experts believe North Korea desperately needs relief from harsh US-led sanctions and the COVID-19 pandemic.
In a statement, the presidential Blue House said South Korea's national security director, Chung Eui-yong, spoke to security ministers and military generals regarding the situation over video conference on Sunday.
Officials in Seoul also urged the North to uphold reconciliation agreements.
According the Unification Ministry, which handles the South's relations with the North, said Seoul's government "views the current situation as grave", calling on both countries to uphold all agreements they have reached.
The North earlier announced it would cut all government and military communication channels with the South after it failed to stop activists floating anti-Pyongyang leaflets across the border.
Cover image: Library picture of North Korea's leader, Kim Jong Un (Picture: PA).