The agriculture ministry said a case was reported at a small aviary run by Gwangjin district officials in eastern Seoul.
"This was the first outbreak in Seoul. We believe it has been caused by infected pheasants that district officials purchased at an open market in the city of Seongnam south of Seoul," a ministry official told AFP.
All 53 chickens, turkeys and pheasants at the aviary were slaughtered Monday night, he said.
"Initial blood tests showed pheasants and chickens were infected with bird flu, although the type of the virus is not yet known," he said.
"Health officials are conducting blood tests to determine whether it was caused by the virulent H5N1 strain."
Quarantine officials slaughtered poultry in a nearby public park and also plan to decontaminate aviaries and poultry farms in other parts of Seoul.
A major theme park in southern Seoul culled 221 ducks, wild chickens and geese in its aviary.
More than six million chickens and ducks have been slaughtered since the country's latest outbreak was reported on April 1, the ministry said.
South Korea's previous outbreak was between November 2006 and March last year, resulting in the temporary suspension of poultry exports to Japan, Hong Kong, Taiwan and elsewhere.
The H5N1 strain has killed more than 240 people worldwide since late 2003. No South Koreans are known to have contracted the disease.