The Asian Football Confederation (AFC) had already confirmed that the match, originally scheduled for March, would finally go ahead on October 5 after twice being postponed.
But the venue had not been finalised amid concerns about player safety.
However AFC secretary-general Windsor John told AFP it would take place in the North Korean capital after officials judged that recent matches in Pyongyang went smoothly.
"At this moment, it will go ahead on October 5 in Pyongyang as decided by the AFC competitions committee," he said.
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The killing sparked a diplomatic crisis which saw both countries banning each other's citizens from leaving, and withdrawing their ambassadors. Tensions have since cooled.
South Korea accuses the North of masterminding the murder, which was carried out using a towel soaked with nerve agent at Kuala Lumpur International Airport.
The president of the Football Association of Malaysia, Tunku Ismail Sultan Ibrahim, raised concerns earlier this year about players being deliberately poisoned if their qualifier went ahead in Pyongyang.
It also said that Tunku Ismail -- the crown prince of the southern state of Johor -- would be allowed to travel directly through North Korea's airspace anytime he wants to visit the nuclear-armed nation.
"It is the highest honour as any other world leader will need to stop by in Beijing beforehand," it said.
Two women accused of the murder of Kim Jong-Nam will go on trial in Malaysia on October 2.
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