A representative of North Korean defectors, South Korean civil groups and local churches lit a Christmas tower on Saturday near the Demilitarised Zone (DMZ), which acts as the border with North Korea.
The event has been banned since 2010 by the South Korean government, due to concerns it could escalate tensions between the two countries.
However, the Defence Ministry granted permission for the tower, on a mountain peak known as Aegibong in Gimpo, South Korea, to be lit this year.
According to local media, a Defence Ministry's official said the government gave permission to light the Christmas tower, which has the message 'peace in the whole world' at its top, to guarantee the religious freedom of soldiers deployed near the North Korean border.
"We held this lighting event to deliver Christianity's message, 'peace in the whole world' to the North Korean people," said Vice-chairman of The Forum of Korea Future Yang Won-joon.
Meanwhile, local residents near the peak have strongly condemned the illumination of the Christmas tower, which is large enough to be seen by North Koreans, saying it is a threat to their safety.
The lighting became even more controversial after it was revealed that North Korean defectors' groups were part of the event.
"I believe that by coming to South Korea and participating in this kind of event, we the North Korean defectors will make the message of peace and anti-war, aimed at North Korea, stronger," said President of North Korea Freedom Coalition Lim Cheon-yong, who had crossed the border to be at the lighting.
Tensions between South Korea and North Korea have been strained of late after North Korea launched a long range rocket to put the country's first satellite in orbit on December 12.
The launched was condemned internationally as it was widely seen as an illicit test of ballistic missile technology.