A police cordon was set up outside the embassy after Pyongyang announced it would ban Malaysians from leaving North Korea, prompting an immediate tit-for-tat move from Kuala Lumpur.
The travel bans are just the latest twist in a heated diplomatic row over the Cold War-style assassination of the half-brother of North Korea's leader in Malaysia last month, which has seen Kuala Lumpur expel Pyongyang's envoy and vice-versa.
"We will wait, if it takes five years, we will wait outside. Definitely somebody will come out," police chief Khalid Abu Bakar said at a press conference in Penang, adding that he believed three people wanted in connection with the murder were in the building.
"This morning the deputy prime minister issued instructions not to allow any North Korean embassy staff to leave the country," Deputy Home Minister Nur Jazlan Mohamed told journalists outside the embassy in Kuala Lumpur.
"At the moment we're trying to ascertain their numbers and their movements."
Prime Minister Najib Razak later said all North Korean citizens in Malaysia, not just embassy staff, would be barred from leaving the country.
Police set up a barricade with cars blocking both ends of the street leading to the North Korean embassy shortly after noon, an AFP journalist said.
Around a dozen armed officers wearing bulletproof vests were stationed at each end of the road.
They rolled out yellow ticker-tape reading "do not cross" and initially denied a request from an embassy official to remove the barricade so a car could leave the compound.
Shortly afterwards the tape was removed and two cars were allowed to leave. The police presence was scaled down but officers remained patrolling the road and were seen recording movements out of the embassy in a ledger.
Around 100 journalists and photographers were also gathered outside.
The embassy, a two-storey neo-colonial house with a North Korean flag fluttering, is situated in Kuala Lumpur's well-heeled Bukit Damansara district, known for its hipster cafes and restaurants.
The nascent stand-off has already been compared to the Julian Assange case, which has seen the founder of the secret-spilling Wikileaks website holed up at the Ecuadorian embassy in London since 2012.
Two women - from Indonesia and Vietnam - have been charged with the killing, but Malaysian police have also named several North Korean suspects, including the embassy's second secretary and an employee of North Korea's national airline.
