The marines' commander vowed unspecified "thousand-fold" retaliation at the funeral, as the country geared up for joint military manoeuvres with the US that are likely to keep tensions soaring following the attack on the South Korean island Yeonpyeong, which also killed two civilians.
Meanwhile North Korea issued new warnings against the Yellow Sea drills, calling them an "unpardonable provocation" and warning of retaliatory attacks that would "turn the stronghold of enemies into a sea of fire" if its own territory was violated.
The comments ran on the state-run Uriminzokkiri website and came a day after the North warned that the peninsula was on the "brink of war".
China, under pressure from the US and South Korea to rein in its ally Pyongyang, urged both sides to show restraint while Washington played down the belligerent rhetoric, noting that the weekend war games were routine and planned well before last week's attack.
"The pressing task now is to put the situation under control and prevent a recurrence of similar incidents," Chinese foreign minister Yang Jiechi told US secretary of state Hillary Clinton by phone, according to the ministry's website.
The strike on Tuesday destroyed large parts of Yeonpyeong in a major escalation of the Koreas' sporadic skirmishes along the disputed sea border. The attack - eight months after a torpedo sank a South Korean warship, killing 46 sailors - has laid bare Seoul's weaknesses in defence 60 years after the war. South Korea's government has struggled to recoup from the surprise attacks and replaced its defence minister.
In Seongnam, near Seoul, about 600 mourners including prime minister Kim Hwang-sik and marine commander Major General You Nak-jun attended the funeral for the two marines at a packed gymnasium in a military hospital as sombre music played.
Dignitaries and family members placed chrysanthemums - a traditional flower of mourning in South Korea - before framed photographs of the two victims, who were posthumously promoted by one rank and awarded a medal.
President Lee Myung-bak has ordered reinforcements for the 4,000 troops on Yeonpyeong and four other Yellow Sea islands, as well as top-level weaponry and upgraded rules of engagement.
Source: The Press Association