A statement issued by the Committee for the Peaceful Reunification of the Fatherland said on Sunday such a move would have consequences for the whole Korean peninsula.
It demanded South Korea unconditionally drop any plan to send combat troops to Iraq, dismissing it as "a reckless plan to sacrifice Koreans in the proxy war of the United States".
"Moves to dispatch troops to Iraq are a serious issue directly related to the dignity, interests and honour of the entire Korean nation," the statement published by the official KCNA news agency concluded.
South Korea has not yet committed itself to any deployment, but it is looking increasingly likely.
One newspaper claimed on Saturday Washington and Seoul were not discussing whether troops should be sent, but how many and where.
US Deputy Defence Secretary Paul Wolfowitz told reporters in Washington the troop commitment would also benefit Seoul, expressing optimism over its pending decision, the JoongAng Ilbo daily added.
"[Any troop deployment in Iraq is] a reckless plan to sacrifice Koreans in the proxy war of the United States"
Official North Korean statement
Wolfowitz suggested South Korean troops would provide practical support to the US military force stationed in Iraq, given that South Koreans know US military operations well after years of joint exercises.
Washington has asked Seoul for combat troops to help put down increasing resistance to occupation.
One South Korean newspaper quoted a US official as saying Washington would like 5000 troops and a decision by mid-October.
President Roh Moo-hyun said on Friday South Korea had to weigh very carefully whether to send combat troops to Iraq, linking progress in resolving the North Korean nuclear crisis to a decision on committing troops to Iraq.
A South Korean fact-finding team sent to Iraq to study the security situation there briefed President Roh on their survey on Saturday, YTN news said, as civic groups raised their voices against any troop dispatch.