The hotline is used to facilitate the travel of South Korean workers to a joint industrial complex in Kaesong, North Korea.
Pyongyang has been angered by fresh UN sanctions following its February 12 nuclear test and US-South Korea military drills.
In recent weeks its habitually fiery rhetoric has escalated, with multiple warnings issued.
On Tuesday, North Korea said it had ordered artillery and rocket units into “combat posture” to prepare to target US bases in Hawaii, Guam and the US mainland.
North Korea has also threatened a “pre-emptive” nuclear strike against the US in recent days and told the South it has scrapped the Korean War armistice agreement.
While the situation is currently unpredictable, some analysts believe Pyongyang may be trying to force the US and others into negotiations, with all-out war unlikely.
Pentagon spokesman George Little said on Tuesday that North Korea’s threats “followed a pattern designed to raise tensions” and that North Korea would “achieve nothing by these threats”.
North Korea has already cut both a Red Cross hotline and another used to communicate with the UN Command at Panmunjom in the Demilitarized Zone that divides the two Koreas.
The military hotline is used by the two sides to communicate over travel to the Kaesong joint industrial zone, inside North Korea.
“Under the situation where a war may break out any moment, there is no need to keep up North-South military communications,” a senior North Korean military official was quoted by KCNA news agency as telling South Korea before the line was severed.
Until now, operations at the joint complex have been normal despite the rise in tensions.
South Korea’s Ministry of Unification confirmed that North Korea was no longer answering calls to the hotline, reports Yonhap news agency.
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