The plan to deploy the powerful system, which fires projectiles to smash into enemy missiles, came last week after the United States placed North Korea's "Supreme Leader" Kim Jong Un on its sanctions blacklist for the first time.
Also on Monday, the North cut all communications with the USA through its office at the UN - a rare channel of communications between the two nations that do not have official diplomatic ties.
According to local news agency Yonhap, National Security Office chief Kim Kwan-jin told a parliamentary session that "South Korea will strongly retaliate" if provoked by the North.
The site in South Korea that will be the base for an advanced United States missile defense system that the government says is created to cope with North Korean threats will be announced on Wednesday, Seoul officials said.
"The Republic will handle all matters arising between us and the United States from now on under our wartime laws, and the matters of Americans detained are no exception to this".
Tensions between the two countries have plunged after the North carried out a spate of missile tests this year following an atomic-bomb test in January - moves that prompted increased USA and United Nations sanctions on the Hermit Kingdom. "We need to eat the grass of the USA, but we also have to feed on the grass of China", said Rep. Park Jie-won, the minor party's floor leader.
The analyst also said the NY channel played a very important role during the 1994 negotiations that led to the signing of the Agreed Framework in Geneva.
Geun-hye is said to have added that the THAAD system was purely aimed at countering the threat from the North, in an apparent message to Beijing. In response, China is predicted to relax its sanctions on North Korea. North Korea's president, Kim Jong-un, is now behaving just as he likes, unsuccessfully testing an submarine-launched ballistic missile within hours of the THAAD announcement, despite general pressure from China.
South Korea's defense ministry said it will announce later on Wednesday the location of a USA military THAAD anti-missile defense unit, a planned deployment that has angered China and prompted North Korea to threaten retaliation. "The question is whether North Korea will stick with demonstrations and tests or will it try something more aggressive".
South Korean authorities have scrambled to allay fears over possible trade retaliations from South Korea's largest trading partner China.
South Korean media reported the southeastern town of Seongju has been picked as a site for the missile system.
This could delay release of two detained Americans, giving North Korea one of its last bits of leverage in negotiations with the United States, said T. Kumar, Amnesty International USA's international advocacy director.
A South Korean man holds a sign during a rally to denounce deploying the Terminal High-Altitude Area Defense, or THAAD, near U.S. Embassy in Seoul, South Korea, Monday, July 11, 2016.
According to CNN on Monday, North Korea has made a decision to eliminate its only direct diplomatic tie with Washington.
Heavy sanctions were already leveled on North Korea due to their nuclear/ballistic missile tests.
The Terminal High Altitude Area Defense system (THAAD) is created to shoot down short, medium and intermediate ballistic missiles, just the type of weapons North Korea claims it has.
North Korea blames the USA exclusively for the current strife between the United States, North Korea, and South Korea.