North Korea is sending a 273-member delegation of athletes and officials to Incheon, west of Seoul, with the first batch scheduled to arrive later on Thursday on a direct flight from Pyongyang.
Organisers had put up the flags of the 45 competing nations in Goyang, a city located north of Seoul which is to host fencing and some football matches, but took them down and replaced them with Olympic Council of Asia (OCA) flags.
Tensions between North and South Korea are high and the two states are still technically in a state of war after the 1950-53 Korean War ended in a truce, not a peace treaty.
"We raised all the participant countries' flags along the road near Goyang stadium but we've taken them down," an IAGOC official told Reuters by telephone on Thursday.
"Some conservative groups were complaining about North Korean flags.
"We are worried that some groups might damage them. It's not that we are expecting any problems to occur but we just wanted to make sure that nothing happened."
The official said that according to OCA regulations, the flags of competing nations had to be flown at the athletes village, competition and training venues, as well as in the host city itself.
"At the places specified in the (OCA) article, flags are still there," the official added.
Talks on the North's participation in the Sept. 19 to Oct. 4 Asiad have been bumpy, and Pyongyang recently decided not to send a cheerleading squad to accompany its athletes, accusing Seoul of "abusing sacred sports and cultural exchange" for a "sinister political purpose".
A South Korean government official said on Thursday the ultimate decision about the flags was made by the organisers.
"The decision is made by the organising committee but we have also cooperated in leading to that," Yonhap news agency quoted the official as saying.
"This is to make sure we do not raise anything that can lead to unnecessary controversies."
A Goyang city official confirmed the flags had been taken down from around the venue.
"We hold soccer and fencing tournaments here at Goyang and the organising committee had put up flags of every participating country, not just that of North Korea," the official said.
"We have had few phone calls from some people about the North Korean flag."
The Goyang official also said that organisers were taking down the national flags at all the venues, including Incheon.
"With controversies building up the organising committee seems to have removed all the flags ... not just those in Goyang but elsewhere as well," the official said.
(Additional reporting by Kahyun Yang, editing by Nick Mulvenney)
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