Tens of thousands of tourists used to visit the Mount Kumgang site every year North Korea says it is seizing assets at a tourist site jointly operated with South Korea.
It has given South Koreans 72 hours to leave the resort at Mount Kumgang, which lies just inside North Korea. The resort used to be a symbol of co-operation between the two Koreas and a key source of hard currency for Pyongyang.
But joint operations were suspended in 2008 after a South Korean tourist was shot dead by a North Korean soldier.
Since then, ties between the two Koreas have deteriorated.
Tensions remain high over the sinking of a South Korean warship in March 2010 and the shelling by North Korea of a South Korean border island in November.
'Legal disposal' North Korea has been threatening action over Mt Kumgang for months, warning Seoul to restart the lucrative tours or lose its assets.
The seizure announcement came via the North's state news agency.
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MOUNT KUMGANG RESORT
- Joint tourist resort developed with money from the South
- Visited by thousands of tourists
- Contains a Red Cross building to host reunions of families divided by the border
- Key source of foreign currency income for the North
- South suspended tours in 2008 after tourist shot dead
"We consider that the South has completely given up all rights on properties owned by South Korean companies and now start legal disposal of them," KCNA said in a statement.
It said assets such as real estate, equipment and vehicles would be considered abandoned and disposed of. No property could be taken from the site and South Korean personnel there had 72 hours to leave, it added.
It blamed the move on the South Korean government, saying it had ignored efforts to settle the issue through negotiations.
The resort was opened in 1998 during a period of stable relations between the two sides, who remain technically at war in the wake of the 1950-53 Korean War.
But relations have chilled since President Lee Myung-bak took office in South Korea in 2008. He wants to link the provision of economic incentives to the North with progress on ending North Korea's nuclear ambitions - angering the North.
South Korea suspended tours to Mt Kumgang in July 2008 after housewife Park Wang-ja, 53, was killed by North Korean guards on a beach near the resort. It says it wants an investigation into her death.
The government in Seoul called the seizure "regrettable".
"We cannot accept the North's arbitrary decision and the North is responsible for all consequences that may happen in the future," said Unification Ministry spokesman Chun Hae-sung.
North Korea has suggested in the past that it could find another partner to run the resort.
It is seeking to boost its economy, in the face of dwindling aid and reportedly severe food shortages inside the country.
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