Each of the nine North Koreans had been shot in the head and two automatic rifles were found near their bodies in the main compartment of the small sub, Lt. Col. Kim Jong-sook said.
The navy had delayed opening the hatch to the compartment overnight for fear it was booby-trapped. To make sure the hatch was safe, workers drilled holes in the deck and inserted tiny, remote-controlled cameras to survey it.
Then they cut through the hatch with welding torches and found the bodies.
The navy commandos climbed down the tower of the sub Thursday and reached an upper access deck, but temporarily halted their search when they encountered a second, sealed hatch leading to the main compartment.
Lt. Col. Kim, a spokesman for the Joint Chiefs of Staff, said two South Korean-made plastic beverage containers were found on the access deck an indication the vessel was returning north after dropping or picking up spies.
The sub sank Tuesday while being towed to Donghae naval base on the east coast. Swift currents and high seas hampered the salvage operation for two days.
Kim said the commandos temporarily stopped their search of the sub's main deck on the advice of a former North Korean navy commando, who warned it could be trapped.
The search Thursday began shortly after the submarine was raised. Navy divers, racing an approaching storm, attached four car-size yellow air bags to lift the submarine 110 feet to the surface where an awaiting tug boat then towed it to shore.
The small, 70-ton Yugo-class submarine normally carries a crew of about six, and is the sort used primarily to transport spies and conduct coastline surveillance.
The sub was found Monday in the general area where a larger North Korean sub ran aground in 1996. That incursion triggered a 53-day manhunt that left 24 North Korean infiltrators and 13 South Koreans dead and relations between the two Koreas at their worst in years.
In Seoul, President Kim Dae-jung reaffirmed that the latest incident won't affect his policy of engagement toward the communist North.
Opposition politicians and some newspaper editorials have criticized Kim for not taking a harder line with North Korea because of the sub episode.
The 1950-53 Korean War ended without a peace treaty and the two nations are technically still at war. Their border on the divided peninsula is the world's most heavily guarded, with 2 million troops on both sides.
By Sang-Hun Choe