The move came only a day after the North announced it would restart the Yongbyon nuclear reactor, and step up production of nuclear weapons materials, an announcement that was fast met with international condemnation.
The joint factory zone earns North Korea around $2 billion a year, writes Reuters, which adde that the area houses 123 companies and around 50,000 North Korean workers, as well as a few hundred South Korean workers.
Over 800 South Korean workers had spent the night in the park, added Reuters, as the South demanded that entry to the park be restored.
"South Korea's government deeply regrets the entry ban and urges it be lifted immediately," said ministry spokesman Kim Hyung-seok of the move, according to the Yonhap news agency, adding the government was working to ensure the safety of the South Koreans who remained there.
Analysts suspected the move was another strike against Seoul by the North Korean regime, in an attempt to prove it could stand against its wealthier Southern neighbor.
"It appears to be a temporary measure intended to raise tensions with the South, having declared it is entering a state of war and having been ridiculed for keeping Kaesong open for financial reasons," said Cheong Seong-chang of the Sejong Institute think tank to Reuters.
The LA Times notes the park was previously closed in 2009, in retaliation for the joint US-South Korean Key Resolve military drill.