State media said a person who defected to South Korea three years ago last week returned through the demarcation line with symptoms of Covid-19.
Leader Kim Jong-un held an emergency meeting with senior officials, imposing a confinement in the border city of Kaesong.
North Korea, a reserved state, had not previously reported any cases of the virus, but analysts said this was unlikely.
"An emergency event occurred in Kaesong City, where a fugitive who went south three years ago, a person suspected of having been infected with the vicious virus, returned on July 19 after illegally crossing the demarcation line." KCNA news agency said.
At Saturday's politburo meeting, Kim was said to have ordered a "maximum emergency system" to contain the virus.
Mr. Kim also launched an investigation into how the person had managed to cross the heavily fortified border, KCNA added, warning those responsible that "severe punishment" would be administered.
On Sunday, a South Korean military official said there was "high chance" that an individual had illegally crossed into the North and that an investigation had been launched, according to the Yonhap news agency.
North Korea closed its borders and put thousands of people in isolation six months ago, when the virus spread across the world.
Earlier this month, Kim praised his country's "brilliant success" in dealing with Covid-19.
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