The move is in retaliation for Seoul blaming Pyongyang for a torpedo attack that sank the Cheonan in March.
The announcement comes as the South Korean navy conducts a major anti-submarine drill.
An international probe found the Cheonan was sunk by a Northern torpedo.
North Korea has denied the allegation.
In a statement on the North Korean official news agency on Thursday, the North Korean military said the country would "completely nullify the bilateral agreement that was concluded to prevent a contingent clash in the West Sea of Korea [Yellow Sea].
"In connection with this, [we] will completely stop using international maritime ultra-short wave walkie-talkies and will immediately cut off the communication line that was opened to handle an emergency situation."
It also warned of an immediate attack if the South's navy violated the disputed Yellow Sea borderline, and that it would consider a complete block on access to a joint industrial project in the North Korean city of Kaesong.
The BBC's John Sudworth in Seoul says the announcement is another piece in the picture that is coming out of North Korea of increasing tension.
On Tuesday, North Korea announced it would sever all ties with the South.
It had also banned South Korean ships and planes from its territory - a measure it repeated in its Thursday statement.
South Korea will "resolutely" deal with the North's measures, a South Korean defence ministry official said without elaborating, according to the Associated Press news agency.
South Korea had already announced a package of measures, including a halt to most trade with North Korea. It is also seeking action via the United Nations Security Council.
The Yellow Sea was the site of deadly naval skirmishes in 1999 and 2002.