The 1,200-tonne Cheonan ship was sunk on 26 March near the disputed inter-Korean border.
On Thursday, an investigation team which included experts from the United States, Australia, Britain and Sweden, presented its findings in Seoul.
“The evidence points overwhelmingly to the conclusion that the torpedo was fired by a North Korean submarine,” the team said during a nationally televised press conference. “There is no other plausible explanation.”
North Korea said the report was based on “sheer fabrication” and warned of “all-out war” in response to any punitive measures. The South is expected to ask the UN Security Council to impose new security measures.
The news was widely condemned by a number of other countries including Japan and Britain.
In the United States, White House spokesman Robert Gibbs described the report as an “objective and scientific review of the evidence”.
"This act of aggression is one more instance of North Korea’s unacceptable behaviour and defiance of international law,” he said. “Such unacceptable behaviour only deepens North Korea’s isolation."
Australian Prime Minister Kevin Rudd joined Gibbs in suggesting the attack was a violation of the armistice agreement that ended the 1950-53 Korean War.