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The team's coach, Kim Jong-hun, was reportedly forced to become a builder and has been expelled from the Workers' Party of Korea.
The entire squad was forced onto a stage at the People's Palace of Culture and subjected to criticism from Pak Myong-chol, the sports minister, as 400 government officials, students and journalists watched.
The players were subjected to a "grand debate" on July 2 because they failed in their "ideological struggle" to succeed in South Africa, Radio Free Asia and South Korean media reported.
The team's coach, Kim Jong-hun, was reportedly forced to become a builder and has been expelled from the Workers' Party of Korea.
The coach was punished for "betraying" Kim Jong-un - one of Supreme Leader Kim Jong-il's sons and heir apparent.
The country, in its first World Cup since 1966, lost all three group games – including a 7-0 defeat to Portugal.
The broadcast of live games had been banned to avoid national embarrassment, but after the spirited 2-1 defeat to Brazil, state television made the Portugal game its first live sports broadcast ever.
Following ideological criticism, the players were then allegedly forced to blame the coach for their defeats.
Only two players avoided the inquisition - Japanese-born Jong Tae-se and An Yong-hak, who flew straight to Japan after the tournament.
However, media in South Korea said the players got off lightly by North Korean standards.
"In the past, North Korean athletes and coaches who performed badly were sent to prison camps," a South Korean intelligence source told the Chosun Ilbo newspaper.
Why on earth is the North Korea even allowed FIFA membership, given their stance on government interference.