The giant banks of speakers, which had lain silent for more than a decade, were drafted back into action two weeks ago after Seoul blamed Pyongyang for landmine blasts that maimed two patrolling South Korean soldiers.
The South demanded an apology, while the North denied any involvement and threatened to attack the propaganda units as cross-border military tensions soared.
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North Korea "expressed regret" for the mine blasts and the South turned off the loudspeakers at midday (local time) today.
South Korea's defence ministry said troops would remain on high alert until it confirmed that the North had stepped down from a "semi-war state" ordered by leader Kim Jong-Un.
"Our side stopped the broadcasts, but we are maintaining our alert posture while we monitor the movement of North Korean troops," a ministry spokesman said.
"It will take time for them to pull back."
The crisis had seen a rapid escalation in military movements, with South Korean and US fighter jets flying simulated bombing sorties and North Korea reportedly deploying dozens of submarines and doubling artillery units at the border.
The United States, which has close to 30,000 troops permanently stationed in South Korea, welcomed the decision to de-escalate.
"It was a very tense several days," US State Department spokesman John Kirby told a regular briefing.
"Now we're going to have to see how it plays out," Kirby added.
The final wording of the communique fell short of the complete apology South Korea had sought for the mine blasts, and there was no explicit acceptance of responsibility by Pyongyang, which has repeatedly denied any role in the incident.
But South Korea's lead negotiator, National Security Adviser Kim Kwan-Jin, insisted the expression of regret was "very meaningful" and said securing it had been the toughest part of the negotiating process.
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