Critics point out that in Seoul and other areas near the inter-Korean border, THAAD's effectiveness is limited against some short-range North Korean missiles and artillery that do not travel into the upper atmosphere.
North Korea's Supreme Leader Kim Jong-Un is expecting to consolidate further his control over a country that has grown increasingly unique over their pursuit of nuclear weapons.
South Korean media reported the southeastern town of Seongju has been picked as a site for the missile system.
North Korea frequently threatens to attack South Korea and United States interests in Asia and the Pacific.
North Korea's military put out a statement that read, in part, Reuters reported: "There will be physical response measure from us as soon as the location and time that the invasionary tool for USA world supremacy, [missile defense] THAAD, will be brought into South Korea are confirmed".
A South Korean Defence Ministry official said selection of a site for THAAD could come "within weeks", and the allies were working to have it operational by the end of 2017.
Given the strong displeasure expressed by China and Russian Federation over the earlier announcement on the deployment of the advanced THAAD system in South Korea, the decision to place it away from the Yellow Sea could have been influenced by Seoul's desire not to incense Beijing. Groups are also reportedly planning petition drives to overturn the military's decision on grounds that the environmental and economic impact of the potential deployment has not been properly vetted.
Kim Jong Un lets out a menacing cackle as he fires a missile.
On Monday, the North Korean state media said Pyongyang told the USA it will terminate contact through a United Nations channel in NY that allowed diplomats to communicate.
The new THAAD missile defense system is capable of shooting down short, medium, and intermediate-range ballistic missiles, and it can do so incredibly quickly.
The North's UN office has long served as a rare avenue of formal and informal communications with the United States, including past talks on nuclear disarmament.
Putting THAAD in Seongju would also allow for protection of major USA military installations in the South, while limiting the range of its radar's reach into China, South Korean media said. The United States maintains 28,500 troops in South Korea, a legacy of the 1950-53 Korean war. It will pay for the THAAD system.
South Korean Finance Minister Yoo Il-ho told parliament the government was making contingency plans in case China took action in response to the deployment. But he added: "I don't think there will be a major retaliatory action in terms of the economy".
Lu also said China would take "necessary measures" in response to the U.S.
The THAAD deployment, the release said, will contribute to a layered missile defense that will enhance the alliance's existing missile defense capabilities against North Korean missile threats. However, South Korea's defense ministry says that most of the ballistic missiles targeting the capital are Scud missiles that fly at an altitude of less than 40 kilometers, and that THAAD is only able to intercept missiles that fly at higher than 40 kilometers.
Leading an angry delegation, Seongju county chief Kim Hang-gon traveled to Seoul earlier in the day to lodge a protest with the defense ministry.
The South Korean military is also planning to increase its short-range Patriot missile defense system to protect vulnerable areas closer to the border. She said it does not target any other country.