North Korea exploded the liaison office at 2:49 p.m., the South Korean unification ministry said.
Earlier, military sources said that smoke was seen and an explosion was heard from the border town.
The explosion came just days after Kim Yo-jong, sister of North Korean leader Kim Jong-un, warned Saturday night, "Before long, a tragic scene of the useless North-South joint liaison office completely collapsed would be seen", Yonhap news agency reported.
North Korea has been lashing out at South Korea for failing to stop defectors from sending anti-Pyongyang leaflets across the border via balloons.
The liaison office was launched in September 2018 to facilitate inter-Korean exchange and cooperation amid a reconciliatory mood created by summit talks between their leaders.
The two Koreas had suspended its operation since early January over concerns over the coronavirus pandemic. Last week, North Korea defined South Korea as an "enemy" and vowed to cut off all communication lines in anger over leaflets sent by activists in South Korea.