North Korea says it is scrapping all non-aggression pacts with South Korea, closing its hotline with Seoul and shutting their shared border point.
The announcement follows a fresh round of UN sanctions punishing Pyongyang for its nuclear test last month.
Earlier, Pyongyang said it reserved the right to a pre-emptive nuclear strike against its "aggressors".
The US said it took the threats seriously, but that "extreme rhetoric" was not unusual for Pyongyang.
South Korea's defence ministry said that the North would become "extinct" if it went through with its threat.
The North Korean announcement, carried on the KCNA state news agency, said the North was cancelling all non-aggression pacts with the South and closing the main Panmunjom border crossing inside the Demilitarized Zone.
It also said it was notifying the South that it was "immediately" cutting off the North-South hotline.
The hotline, installed in 1971, is intended as a means of direct communication at a time of high tension, but is also used to co-ordinate the passage of people and goods through the heavily fortified Demilitarized Zone.
KCNA said the hotline, which has been severed several times before, "can no longer perform its mission due to the prevailing grave situation".
North Korean leader Kim Jong-un is also reported to have visited front-line military units that were involved in the shelling of a South Korean island in 2010.
KCNA said he had urged the soldiers there to keep themselves ready to "annihilate the enemy" at any time, and reconfirmed so-called "enemy targets" on five islands in the West Sea.