Last month, the two Koreas traded artillery fire across the disputed western sea borderNorth Korea has begun a live-fire drill near the disputed inter-Korean western maritime border, a South Korean report says.
It is the second time in a month that Pyongyang has carried out such exercises.
South Korea's defence ministry said it was notified early on Tuesday that drills would take place near two islands west of the Korean peninsula.
A South Korean spokesman said its military was "fully prepared".
The area has been a flashpoint between the two Koreas. The UN drew the western border after the Korean War, but North Korea has never recognised it.
A similar North Korean exercise at the end of March resulted in the two sides exchanging hundreds of rounds of artillery fire.
"The North notified us there would be live-fire drills today north of the [border] near Yeonpyeong and Baengnyeong islands," a defence ministry spokesman told AFP news agency.
Both islands are hotspots. In November 2010, North Korea fired shells at Yeonpyeong, killing two marines and two civilians, in what it said was a response to South Korean military exercises.
Earlier that year, a South Korean warship sank near Baengnyeong island with the loss of 46 lives.
Seoul says Pyongyang torpedoed the vessel but North Korea denies any role in the incident.
Test fearsThis latest move from North Korea comes as satellite images suggest Pyongyang could be preparing to carry out a nuclear test.
South Korea's military said it had recently detected "a lot of activity" at the North's Punggye-ri test site.
The test, if it went ahead, would be Pyongyang's fourth, after tests in 2006, 2009 and 2013.
UN Security Council resolution 1718, passed in October 2006 after the first nuclear test, bans North Korea from nuclear and missile tests.
The latest live-fire drill also follows President Barack Obama's visit to South Korea last week, which was strongly opposed by North Korea.
Washington has led calls for Pyongyang to abandon its nuclear weapons programme.
In a statement on Monday, North Korea launched one of its strongest attacks on the South Korean leader, President Park Geun-hye, calling her a "despicable prostitute" who pandered to her "pimp", Mr Obama.
South Korea described the comments as "foul words".