"President Lee (Myung-Bak) urged the public to go about their usual economic activities without turbulence," a senior presidential official told a televised news conference.
Lee had a phone conversation with US President Barack Obama about two hours after Kim's death was announced by the North's state media at noon (0300 GMT).
"The two leaders agreed to closely cooperate and monitor the situation together," a presidential spokesman said.
The Joint Chiefs of Staff (JCS) said that in addition to the military alert, border air surveillance was increased.
Seoul also asked its US ally, which stations 28,500 troops in the South, to step up surveillance by planes and satellites, a JCS spokesman said.
"Monitoring and security around border areas has been strengthened. We are paying close attention to any movements by the North's military," a defence ministry spokesman told AFP.
"All commanders are on alert and the South and US are beefing up the sharing of military intelligence. There have been no particular moves by the North's military yet."
Lee ordered all government officials on emergency response status, meaning they are restricted from taking leave or travelling.
The North's state media reported earlier Monday that the 69-year-old Kim died of a heart attack Saturday while on board a train during one of his field trips.
Lee called a National Security Council meeting at the presidential Blue House and an emergency cabinet meeting was to begin at 3:00 pm (0600 GMT). "All Blue House officials are in emergency mode," his spokesman said.
North and South Korea have remained technically at war since their three-year Korean conflict ended only in an armistice in 1953.
Relations have been especially tense since the South accused the North of sinking a warship in March 2010 with the loss of 46 lives.
The North denied involvement in the sinking but shelled a South Korean island in November 2010, killing four people.
Many units in the North's 1.1 million-strong armed forces are stationed close to the heavily fortified border, along with thousands of missiles.
US troops have been based in the South since 1953 to bolster the South's military, which currently numbers 650,000.
- AFP/cc
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