South Korea had already withdrawn from parts of the deal after Pyongyang launched a spy satellite on Tuesday.
North Korea will “never be bound” by the agreement, state media reported on Thursday, citing the Defence Ministry.
The Comprehensive Military Agreement was signed at a 2018 summit between North Korean leader Kim Jong Un and former South Korean President Moon Jae-in as part of an attempt to reduce tensions on the peninsula and build trust between the two countries.
Seoul withdrew from parts of the deal on Wednesday after Pyongyang said it had successfully launched the Malligyong-1 into orbit, following failures in May and August.
“We will immediately restore all military measures that have been halted according to the North-South military agreement,” the ministry said in a statement carried by the official Korean Central News Agency (KCNA).
“We will withdraw the military steps taken to prevent military tension and conflict in all spheres including ground, sea and air, and deploy more powerful armed forces and new-type military hardware in the region along the Military Demarcation Line,” it continued.
South Korea must “pay dearly for their irresponsible and grave political and military provocations that have pushed the present situation to an uncontrollable phase,” North Korea said.
State media reported on Wednesday that Kim had already been able to review imagery sent back by the satellite of the United States’s military bases in the Pacific island of Guam.
Kim has made the successful development of reconnaissance satellites a priority of his military modernisation programme, arguing the equipment would improve North Korea’s ability to monitor its neighbour and deal with alleged threats from South Korea and the US.
The Malligyong-1 was launched late on Tuesday night, hours after Pyongyang had notified Japan of its intention to launch a satellite between November 22 and December 1.
Such launches are banned under UN Security Council sanctions designed to curb nuclear-armed North Korea’s ballistic missile programme, and it was swiftly condemned by South Korea, Japan, the US and the United Nations.
On Wednesday afternoon, in response to the launch, South Korea resumed surveillance operations on its northern border in a partial suspension of the 2018 deal.