A North Korean fishing boat was confronted in the Sea of Japan by a Coast Guard vessel last month and the encounter ended with the Korean ship being sunk after a collision.
As violent criminals, the two would not be recognized as refugees by worldwide law, Lee said.
The two men were deported to the North via the truce village of Panmunjom on Thursday after informing Pyongyang of the plan, ministry spokesman Lee Sang-min told reporters.
The government has also planned to send back the fishing boat of the North Koreans, Lee added.
After two days, the two were captured by the South Korean navy on Saturday.
But the investigation concluded that the men had killed 16 fishermen in their boat and then fled to South Korea, the Seoul Unification Ministry said.
A unification ministry official declined to give specifics about the murders, but Seoul's joint investigation team confirmed that the men killed 16 people "very cruelly" with "blunt objects".More news: Whitney Houston's Gay Lover Tells All in New Book
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USA soldiers participating in a drill with South Korean troops near Pocheon in 2017.
Denouncing the move as a "declaration of confrontation" against North Korea, the official described the Pentagon's intentions to proceed with the exercises as "reckless military frenzy" that is "extremely provocative and risky".
The trio later killed the 15 other fishermen one by one and threw their bodies overboard. One was arrested by police back at Kimchaek Port, while the other two mutineers escaped back to sea.
"We also assessed that if they were accepted into our society, they would pose danger to our people's lives and safety as vicious criminals who can not be recognised as refugees under worldwide law".
"South Korea's sovereign credit rating and outlook are likely to hinge on geopolitical risks from now on and this is because North Korea-related risks can have an adverse impact on South Korea's economic, fiscal and external sides", it went on to say.
About 32,000 North Koreans have fled to the South since the end of the Korean War, a lot of them via China and in the past two decades.