The agriculture ministry ordered the culling of the remaining 6,000 birds on the farm in the southern city of Iksan, a major centre for the country's poultry industry.
It sent an emergency supply of Tamiflu for 50 people and influenza vaccines for another 300.
Kim Chang-Seob, the ministry's chief veterinary officer, said the government received word of the outbreak Wednesday, and from the large number of deaths it suspected the virus may be a virulent strain.
The result of tests on the virus was expected late Saturday.
The ministry banned shipments to and from six farms within a 500-metre radius of the affected one.
It said the area would be expanded if the bird flu virus is confirmed.
More than 200 poultry farms are within 10 km of the affected one, as is the country's top chicken meat processor Halim, which is supplied by them.
Halim supplies 20 to 25 percent of the country's demand for chicken and also export cooked chicken to Japan and other countries.
"We are closely monitoring the case, preparing measures to minimize any negative impact it may have on our business," Halim spokesman Son Min-Su said.
Kim sought to allay public concerns.
"The virus is destroyed easily by heat of more than 70 degrees Celsius. There would be no health problems if chickens, even infected ones, are well cooked," he told journalists.
Iksan is 250 kilometres (155 miles) south of Seoul.
The ministry has been on high alert for bird flu as migratory birds that can spread the deadly disease flock to the country for the winter.
South Korea was the first country to report avian flu when the latest outbreaks, the largest and most severe on record, began in Asia in mid-2003.
From December 2003 to March 2004, it destroyed 5.3 million ducks and chickens at a cost of 150 billion won (US$161.3 million) and in December last year declared itself free of the virus.
The World Health Organisation has also said it considered South Korea free of the disease.
In September this year, health officials said five South Koreans had been infected by the H5N1 virus two years ago while helping slaughter birds, but had shown no symptoms.
It was only the second known incidence of human infection in South Korea.
In February four people were confirmed to have been infected with H5N1, but they also showed no symptoms.
source - AFP