The North has so far conducted three nuclear tests in tunnels at Punggye-ri, in 2006, 2009 and 2013.
"An increased movement of people and cars has been spotted at the nuclear site," said the official, asking not to be named.
"North Korea appears to be in the process of digging another tunnel,” he added.
Another source said that the North's move indicates its intention to conduct a fourth nuclear test although more analysis is needed to access whether the test is imminent.
The detection came more than a month after the North hinted that it may conduct a nuclear test in response to what it claims is the hostile policy of the United States and its allies.
It also came ahead of a planned trilateral summit among South Korea, China and Japan slated for Sunday.
The leaders from the three nations plan to hold their first three-way summit in more than three years, during which North Korea's nuclear weapons program is likely to be one of the main agenda items.
The Unification Ministry said it is closely monitoring the North's move, though it declined to provide its own analysis.
"South Korea and the United States are closely watching North Korea's nuclear activity," Ministry spokesman Jeong Joon-hee told a regular press briefing.
Experts said that North Korea seems to want to demonstrate its nuclear capability ahead of a series of summits involving the three nations.
"North Korea likely doesn't think it is a good time to conduct a nuke test," said Kim Yong-hyun, a professor of North Korean studies at Dongguk University adding, "but Pyongyang seems to want to politicize its nuclear program in a calculated move."
YNA/MNA
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