The announcement Wednesday was expected as many South Koreans believe that Seoul's previous conservative government settled for far too less in the 2015 deal, and that Japan still hasn't acknowledged legal responsibility for atrocities during its colonial occupation of the Korean Peninsula from 1910 to 1945.
Japan, meanwhile, is angry that South Korea is effectively walking back on an internationally recognized agreement. A look at the intensifying dispute between South Korea and Japan:
The women forced to work in the brothels were mainly from Japan and Korea, but also from the Philippines, China, Taiwan, Indonesia and elsewhere in Asia. They were sent to hundreds of front-line brothels called "comfort stations" to provide sex for the Japanese army that invaded and occupied Asian countries from the early 1930s through the end of World War II.
Wartime documents show that Japan's military supervised the brothels, and set the tariffs, service hours and hygiene standards. Government documents say the purpose was to keep soldiers from raping women and triggering anti-Japan sentiment, as well as preventing venereal disease and Chinese espionage.
Initially, some were professionals or from poor Japanese families, historians say. In South Korea, they were often deceived by local agents who recruited them promising factory work. Later in the war, many minors in the Philippines were kidnapped, raped or tricked into working in the brothels, some victims said.
Japan's government has repeatedly denied there was any coercion, and more recently has refused to use the term "sex slave" for the women in English media and U.N. documents.
Japan has intensified its stance in recent years, especially under Prime Minister Shinzo Abe's nationalist government, which says there is no official record showing the wartime government's systematic use of coercion. Some ultra-right-wing lawmakers say the South Korean women forced to work in the brothels were all prostitutes, and there is increasing bashing of supporters of the survivors, as well as journalists for writing stories about them.
The issue flared in 2014 after a former reporter from Japan's left-leaning Asahi newspaper was accused of fabricating his report on the first South Korean survivor who came forward, leading to defamation lawsuits still pending in Japan.
Statues honoring the victims erected in the U.S. and elsewhere by South Korean groups have also upset the Japanese government.
THE WOMEN'S DEMANDS
The former victims have demanded compensation and an apology from Japan's government. Japan in 1995 set up the semi-government Asian Women's Fund, a scheme to finance compensatory projects for victims from across Asia, including South Koreans.
In all, the fund paid nearly 5 billion yen ($44.2 million) for medical and welfare projects for all the recognized women from across Asia, including 61 South Koreans. But many others in South Korea rejected the fund because of pressure from their support group's policy to keep demanding official compensation.
Estimates by historians for the total number of victims range from 20,000 to 200,000. In South Korea, about 240 women came forward and registered with the government as victims, and only 27 of them are still alive.
THE 2015 DEAL
Under the agreement reached in December 2015, Japan pledged to fund a Seoul-based foundation to help support the victims. However, Japan said it didn't consider the 1 billion yen it provided to the fund as compensation, insisting that all wartime compensation issues were settled in a 1965 treaty that restored diplomatic ties between the countries and was accompanied by more than $800 million in economic aid and loans from Tokyo to Seoul.
South Korea, in exchange, vowed to refrain from criticizing Japan over the issue and will try to resolve a Japanese grievance over a statue of a girl representing victims of sexual slavery that sits in front of the Japanese Embassy in downtown Seoul.
The deal initially described by Seoul and Tokyo as "final and irreversible" turned out to be anything but. Many victims refused payment. Anti-Japan activists rallied furiously, accusing the government of former conservative President Park Geun-hye of "selling away" the honor and dignity of the aging victims. College students began camping out in the street across the embassy to protect the statue from potential attempts to remove it. A 64-year-old Buddhist monk died after setting himself on fire to protest the deal in January 2017.
Japan expressed anger that South Korea didn't taken specific steps to remove the statue and similar monuments in other places in the country, insisting there has been a clear understanding to do so.
Liberal South Korean President Moon Jae-in, who won office in May last year following Park's removal from office over a corruption scandal, said in December 2017 that the 2015 agreement was seriously flawed because Park's government failed to properly communicate with the victims before reaching the deal.
The legacy of sexual slavery is hardly the only issue of contention between South Korea and Japan.
The countries are at odds over a ruling by Seoul's Supreme Court last month that a major Japanese steelmaker should compensate four South Koreans for forced labor during Japan's colonial rule of the Korean Peninsula before the end of World War II.
Seoul has also expressed resentment about Tokyo's territorial claims over the disputed eastern islands occupied by South Korea. Japan last month refused to send a warship to an international fleet review hosted by South Korea after Seoul requested the removal of the Japanese navy's "rising sun" flag, which many South Koreans see as a symbol of Japan's wartime aggression.
Seoul and Tokyo's bitter disputes over history have complicated Washington's efforts to strengthen trilateral cooperation to deal with North Korea's nuclear threat and China's growing influence in the region. Japan has also expressed wariness over South Korea's outreach to rival North Korea in past months, stressing the need to maintain pressure until the North takes concrete steps toward relinquishing its nuclear weapons and missiles.
"The Moon government is trying to maintain a two-track approach — cooperating with Tokyo on security and economic issues, but firmly responding to issues surrounding history and territorial claims," said Bong Young-shik, an analyst at Seoul's Yonsei University.
Yamaguchi reported from Tokyo.