The blaze started on the North Korean side of the Demilitarised Zone (DMZ) which surrounds the border and spread quickly along the road leading to the industrial complex in the North, the South's unification ministry said.
The blaze has yet to reach the complex itself but South Korean personnel working in Kaesong are now unable to leave.
Scores of South Koreans commute via the cross-border road every day.
"Both sides are now trying to control the blaze after blocking access to the Kaesong industrial park," a ministry official told AFP.
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"Due to strong winds, it has spread quickly through the DMZ," a ministry spokesman said, adding South Korea mobilised 11 fire trucks, seven helicopters and dozens of firefighters to put out the fire only on the southern side of the buffer zone.
As of 5:00 pm (0800 GMT), there had been no reports of casualties or property damage, the ministry said.
Bush fires are common in the dry spring season in and near the four-kilometre-wide DMZ, which was established at the end of the 1950-53 Korean War.
The two Koreas are currently locked in a row over wages in Kaesong.
Pyongyang last month announced an across-the-board rise in basic salaries -- a move rejected by the South, which insisted any increase must be agreed by a joint committee overseeing the management of the park.