Last year, the allies agreed to create the combat wartime division of their troops to bolster tactical-level capabilities to better counter threats by the North.
The new division consists of a brigade from the South Korean Army and the US 2nd Infantry Division in Uijeongbu, north of Seoul. Each unit will carry out normal duties in its assigned areas in peacetime.
The commander of the 2nd Division will lead the new military entity while a South-Korean brigadier general will assume the position of deputy commander.
The new entity will be the first South-Korea-US combined military unit capable of carrying out combat missions since the Combined Field Army Command was disbanded in 1992, according to the ministry.
A ceremony to recognize the establishment of the combined division was held on Wednesday at Camp Red Cloud in Uijeongbu.
According to a US relocation plan, the combined unit will be moved to Pyeongtaek, 70 kilometers south of Seoul, by the end of 2016.
Currently, about 28,500 US troops are stationed in South Korea.