Officials said the Lighthouse Winmore had secretly transferred 600 tonnes of refined oil to a North Korean ship.
A UN Security Council resolution bans ship-to-ship transfers of any goods destined for Pyongyang.
The revelations came as China denied claims by President Donald Trump it had allowed oil shipments to the North.
The ship entered Yeosu port in South Korea on 11 October to load up with refined oil and left for Taiwan four days later, Yonhap news agency reported.
But instead of going to Taiwan it transferred the oil to a North Korean ship and three other vessels in international waters on 19 October, South Korean officials were quoted as saying.
This defies a UN Security Council resolution imposed on 11 September.
The New York Times said the transfer was captured in US satellite photos, released by the US Treasury in November, although the Lighthouse Winmore was not named by the Treasury.
The Lighthouse Winmore was seized when it returned to Yeosu in November and remains in South Korea, South Korean officials said.
There has been increasing suspicion in Washington that Chinese ships have been secretly transferring petroleum to North Korean vessels at sea.
China has continued to deny this, saying it fully enforces UN resolutions against Pyongyang.
On Thursday, Mr Trump tweeted he was “very disappointed” with China, which he said had been “caught red-handed”. (Courtesy BBC)