South Korean prosecutors have indicted five people on charges of spying for North Korea.
North Korea's recent nuclear test complicated ties
Prosecutors say it is the biggest espionage case since the two neighbours began a process of reconciliation at a key summit in 2000.
The five include an American of Korean origin, Jang Min-ho, who is accused of recruiting the others and passing information to North Korea.
Pyongyang denounced the case as a "calculated plot" to smear North Korea.
Prosecutors in Seoul say Jang Min-ho set up the spy ring after visiting North Korea in 1989, and is alleged to have met North Korean agents at least seven times in China and Thailand.
He and the other four are accused of passing on "national secrets" such as US troop movements in South Korea and the personal details of hundreds of politicians.
"The suspects spied in an organised way after receiving instructions from North Korea," Ahn Chang-ho at Seoul's Central District Prosecutors' Office said.
"This is the biggest spy case" since the 2000 rapprochement, he added.
The five - who were arrested in October - include two members of the left-leaning minor opposition Democratic Labor Party (DLP).
The DLP - already under fire for its pro-North Korea image - said the charges against its members were groundless.
North and South Korea are still technically at war since their 1950-53 conflict ended in an armistice rather than a peace agreement.
But South Korea has operated a so-called "sunshine policy" of engagement with its Communist neighbour since 2000.
That policy has come under strain since North Korea tested a nuclear device in October, with calls for the South to be tougher on its neighbour.