President Park Geun-hye said the North was “carrying out a reign of terror”, after news of the purge of Chang Song-thaek, uncle of leader Kim Jong-un.
North Korea confirmed on Monday that Mr Chang was stripped off official posts.
The move has been seen as the biggest shake-up in Pyongyang since the death of leader Kim Jong-il in December 2011.
“North Korea is currently carrying out a reign of terror, undertaking a large-scale purge in order to strengthen Kim Jong-un’s power,” Ms Park said during a cabinet meeting.
“From now on, South-North Korea relations may become more unstable.”
Mr Chang, who is married to Kim Jong-il’s sister, was seen as a powerful figure guiding the administration of Kim Jong-un.
But on Monday, North Korean state media confirmed South Korean reports that he had fallen from grace, accusing him of forming factions against the state, corruption and “depraved” acts such as womanising and drug abuse.
North Korea television also broadcast images of the once-powerful man being removed from a meeting by guards.
State news agency KCNA on Tuesday reported on a meeting of the Workers’ Party central committee on 8 December that it said laid bare Mr Chang’s crimes.
It said that Mr Chang’s group dared to “challenge the party through factional acts, while attempting to undermine the unitary leadership of the party”.
“The party eliminated Jang [Chang] and decisively purged his group, dealing a telling blow at its dangerous factional acts,” KCNA said.
The official Rodong Sinmun newspaper, for its part, carried an editorial on its front page on Tuesday calling for unity under Kim Jong-un and said North Korea would “never forgive any traitors”.
Meanwhile, China – one of North Korea’s closest allies – described Mr Chang’s case as “internal politics”.
“As a friendly neighbour of the DPRK [North Korea], we hope they will maintain national stability, and ensure the development and well-being of the people,” said Ministry of Foreign Affairs spokesman Hong Lei in a regular press briefing.
The ministry’s call for stability in the North was echoed in Chinese media, who said that this was in Beijing’s best interest.
The Global Times newspaper says China “should help bring about Kim Jong-un’s visit to China” soon, which it says would “benefit the North’s long-term stability and bilateral friendly ties”.
The US has not issued a formal statement on Mr Chang’s purge so far.
A party veteran and major administration figure, Mr Chang served as vice-chairman of the powerful National Defence Commission and was believed to have considerable influence over Kim Jong-un.