North Korea has withdrawn from the inter-Korean liaison office which was opened amid a warming of ties last year to facilitate talks with the South.
Seoul said it was contacted on Friday and informed that the North's staff would be leaving later in the day.
It has expressed its regret at the decision and is urging staff from the North to return as soon as possible.
The two Koreas have not met since a failed summit last month between the US and North Korean leaders.
The liaison office, on the North's side of the militarised border, had allowed officials from North and South Korea to communicate on a regular basis for the first time since the Korean War. It is meant to be staffed by up to 20 people from each side.
The BBC's Laura Bicker in Seoul says South Korean President Moon Jae-in had hoped his diplomatic relationship with North Korean leader Kim Jong-un had progressed far enough to withstand any issues between the North and the US. It appears that Pyongyang did not feel the same.
Seoul had hoped to act as an intermediary between Trump and Kim. The fact that Pyongyang is not even willing to have staff in the same office as South Korea right now does not bode well.