A group of defectors from North Korea and US human rights activists had said they would use gas-filled balloons to drop 200,000 leaflets critical of Pyongyang over the tense border.
But a contingent of plain-clothed policemen prevented the activists from unloading leaflets and other materials for the launch from a pickup truck at Imjingak, a tourist site near the border.
Hours earlier, the North's military warned it would fire upon the launch site, accusing the South of escalating confrontation with the North "in collusion" with the United States.
A leading activist, Park Sang-Hak, was taken into custody briefly after he attempted to drive the vehicle through a police line to get to the planned launch site, some 300 meters (1,000 feet) away.
"If South Korea is going to do everything because of threats from North Korea, then South Korea is a hostage. South Korea is not a free country", he said.
Police stopped similar launches in April and May this year, citing protests from local residents living in the area.
Local residents oppose such action as the North has threatened to shell sites used to launch leaflets which often carry messages such as calls for an uprising against the communist regime.
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