North Korea has cancelled a trial run of trains across the border with the South, an official in Seoul has said.
The first test of the rail link had been scheduled for Thursday - when the trains would have been the first to cross the border in more than 50 years.
The border, including a Demilitarised Zone (DMZ), has been sealed since the end of the Korean War.
Links between the two Koreas are being slowly re-established, as the South aims to engage its secretive neighbour.
The North notified the South on Wednesday that it wanted the planned test runs to be cancelled, South Korean Unification Ministry official Kang Jong-seok told the Associated Press.
He gave no reason for Pyongyang's request, but South Korean television said the North's powerful military had objected to the trips.
240 km long and 4km wide, the DMZ takes up about 0.5% of Korean peninsula
N Korea has 1.1 million man army along the border. S Korea and US forces total more than 700,000
Both sides must agree a military protocol for cross-border travel, in order to guarantee passenger safety.
Since hearing of the North Korean request, officials in the South have reportedly been holding an emergency meeting to discuss the issue.
If and when the rail link finally opens, there are obvious advantages for both sides.
For South Korea, it would mean that goods produced using cheap North Korean labour and land, in a joint industrialised zone to the north of the border, could be more easily transported out of the country.
For the North, it would boost the tourist trade, providing a link to a mountain resort on the east coast popular with South Koreans.
The impending trials of the rail link had renewed optimism in the South that reconciliation efforts with the reclusive North were making progress.