The benchmark Korea Composite Stock Price Index (Kospi) lost 35.72 points, or 1.14 percent, to close at 3,097.92 points.
Trading volume was moderate at about 881.95 million shares worth 14.38 trillion won ($12.1 billion), with losers outnumbering gainers 711 to 193.
Institutions offloaded a net 555.2 billion won, while retail investors purchased a net 559.9 billion won. Foreigners picked up a net 10.6 billion won.
The local index got off to a weak start, tracking overnight tech losses on Wall Street.
"The rise in US Treasury yields hurt US tech shares, which in turn, had an impact on the local market," Kim Seok-hwan, an analyst at Mirae Asset Securities, said.
The continued surge in South Korea's daily virus cases after an extended holiday last week also dampened investor sentiment. The daily figure remained in the 2,000s for a third day Tuesday.
Daishin Securities analyst Lee Kyoung-min added the local index was also weighed down by a string of investor concerns, including default risks surrounding Chinese property giant Evergrande as well as the lack of progress in US debt ceiling talks.
Top cap Samsung Electronics dipped 1.8 percent to 76,300 won, and No. 2 chipmaker SK hynix fell 0.96 percent to 103,500 won.
Internet portal operator Naver retreated 2.61 percent to 392,500 won, and messaging giant Kakao lost 2.08 percent to 117,500 won.
Pharmaceutical firm Samsung Biologics tumbled 5.33 percent to 871,000 won, and top automaker Hyundai Motor moved down 1.23 percent to 201,500 won.
Among gainers, leading chemical firm LG Chem rose 0.78 percent to 776,000 won, and battery maker SK Innovation leaped 3.78 percent to 261,000 won after the company said it would build three electric vehicle battery plants in the United States with Ford.
Hybe, the company behind global K-pop stars BTS, added 1.98 percent to 283,500 won after it said the group will hold a series of concerts in the United States later this year, the septet's first live concerts since 2019.
The local currency closed at 1,184.4 won against the US dollar, down 7.6 won from the previous session's close. (Yonhap)