Since the first case of the highly pathogenic H5N6 virus was confirmed in mid-November, it has rapidly spread nationwide, leading to a record 16 million chicken and ducks being culled.
Previously, the worst outbreak to hit the South was recorded in 2014 when nearly 14 million birds were slaughtered.
"We raised the alert level to the 'grave level' in a bid to contain the spread of the avian influenza," Agriculture Minister Kim Jae-Soo said.
"Grave" is the final step on the four-level alert system, and means officials can ban movements of vehicles carrying birds, close poultry meat stores or animal slaughterhouses, vaccinate all poultry, or disinfect any vehicles on the road.
"We raised the alert level because of this reality in which we are witnessing the growing speed and infection rate of the outbreak," Kim said.
The move can potentially cause a sudden hike in poultry and egg prices in Asia's fourth-largest economy.
Health authorities have come under fire for failing to respond properly to the outbreak, which coincided with a political crisis that paralysed the administration of recently impeached president Park Geun-Hye.
There have been no cases of human infections from H5N6 in the South, although the virus killed six people in China between 2014 and 2016.
The World Health Organization warned earlier this year that the strain has caused "severe infection" in humans.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)