The Commerce, Industry and Energy Ministry said the evacuation affects the last 22 businessmen still in Iraq, and that it will be finished by early next month.
Most of them work for South Korean companies that supply the US military, Minister Lee Hee-beom said.
The captured man, Kim Sun-il, worked for such a supplier. His captors, purportedly an al-Qaida-linked group, said they would kill him if the South Korean government did not decide by early Tuesday to cancel its deployment of troops to Iraq.
The deadline passed with the government sticking to its dispatch of 3000 soldiers. The first deployment is due in August.
On Tuesday, there was still no definitive word on whether Kim was still alive.
"We have various intelligence and information on that matter, but we cannot give you a definite answer," Foreign Ministry spokesman Shin Bong-kil said a briefing.
Shin said South Korea was trying to establish contact with as many countries and organisations as possible to help win the release of the 33-year-old Kim.
"We are trying our best through all the possible channels," Shin said. He declined to comment on whether South Korea had direct contact with the captors.
South Korea's Yonhap news agency cited an unnamed Foreign Ministry official as saying sources were providing "a lot of information" and that the ministry had "partially" confirmed Kim was safe. But he refused to disclose further details, including what he meant by the confirmation being partial.
By mid-afternoon, President Roh Moo-hyun had not received any definitive reports about the captive's fate, said deputy presidential spokesman Kim Jong-min.
The captured man Kim Sun-il was
working for a military supplier
South Korean government officials have given numerous interviews to Arab media appealing for Kim's release, Shin said.
South Korea meanwhile said it was not first informed about Kim's kidnapping through US channels, despite a report that Kim's boss apparently first heard about the incident from US military officials in Iraq before contacting South Korean authorities.
Shin said the remarks by Kim's boss still needed confirmation, but added that Seoul first learned of the kidnapping through its embassy in Qatar.
South Korea on Saturday warned its people not to travel to Iraq, saying its decision to send troops to the country might prompt attacks on South Koreans.
Companies hoping to do business there must now first win approval from the Commerce, Industry and Energy Ministry, Lee said.
South Korean conglomerates such as Hyundai Corporation and Daewoo International Corporation have also stepped up security at overseas branches and ordered employees to avoid dangerous areas, Yonhap reported.
The South Korean government plans to send the 3000 troops to the northern Iraqi city of Irbil. They will be joined by 600 military medics and engineers who are currently in southern Iraqi city of Nasiriyah. When complete, the deployment will make South Korea the biggest coalition partner after the United States and Britain.
Seoul has portrayed the dispatch as a way of strengthening its alliance with the United States, thereby winning more support from Washington for a peaceful end to a long-running dispute over North Korea's nuclear weapons development. But many in South Korea oppose the mission.
In April, seven South Korean missionaries were briefly detained by armed men in Iraq.