Market analysts attribute the drop to growing fears of a U.S. economic slowdown, exacerbated by weak manufacturing and employment data released last week.
As of 3:02 p.m. the KOSPI was down 231.43 points, or 8.65 percent, to 2,444.76.
The Korea Exchange activated a circuit breaker on the benchmark KOSPI market at 2:14:30 p.m., halting trading for 20 minutes after the index fell 8.1 percent to 2,676.19.
This marks the sixth time in history that the trading curb has been activated on the KOSPI.
Earlier, at 1:56 p.m., the tech-heavy KOSDAQ market also triggered the same measure when it plunged 8.06 percent to 716.53.
Circuit breakers are automatic trading halts designed to curb panic selling and excessive market volatility.
They are activated when an index falls more than 8 percent from the previous day's close and remains at that level for one minute.
The last time a circuit breaker was issued on the Korean market was on March 19, 2020, during the early stages of the COVID-19 pandemic.
After the 20-minute trading halt, markets resumed with a 10-minute single-price auction before returning to regular trading.
Earlier, at 11:00:20 a.m., the Korea Exchange activated a sidecar curb temporarily halting program selling for the first time in more than four years.
At the time of activation, the KOSPI 200 futures index had fallen 18.65 points, or 5.08 percent, to 348.05.
The sidecar order is activated when prices fall 5 percent or more below their previous close and persist for over a minute.
The last time the sidecar was issued on Seoul's main bourse was on March 23, 2020.
