Nissan has denied fitting devices to cheat emissions tests to its Sunderland-built Qashqais.
The South Korean Government has announced it is to fine the firm's operation in the country for manipulating emissions tests on the crossover vehicles.
The Environment Ministry said it will fine Nissan's Korean operation 330 million won (£195,000) and recall 814 Qashqai vehicles sold since November.
It also plans to file a complaint with prosecutors against the head of Nissan's South Korean operation.
Nissan has denied any wrongdoing and says the South Korean authorities' findings are at odds with those from the European Union, which concluded Nissan vehicles used no illegal devices.
The Japanese company said it will assess the situation and continue to work with South Korean authorities.
The South Korean government investigated diesel cars sold in South Korea in the wake of Volkswagen's emissions scandal last year.
A company spokesman said: "Nissan does not manipulate data related to our vehicles.
"The Nissan Qashqai has been correctly homologated under Korean regulations. Nissan has not and does not employ illegal defeat or cheat devices in any of the cars that we make.
"Furthermore, following stringent testing and using similar standards to the Korean tests, EU authorities have concluded that Nissan vehicles they tested used no illegal defeat device.
"Although the conclusions reached by the Korean authorities are inconsistent with those of other regulators, Nissan will carefully assess and consider appropriate next steps.
"Nissan is committed to upholding the law and meeting or exceeding regulations in every market where we operate. We are continuing to work with the Korean authorities.”