Pyongyang threatened "physical retaliation" if the exercise went head, but analysts said the response echoed similar bellicose remarks by the reclusive state in recent months, and that the chances of a military escalation were slim.
Seungjoo Baek, of the Korea Institute for Defense Analyses think-tank, rejected the North's threats of retaliation as rhetoric, but cautioned that Pyongyang could respond in the future by test firing a missile.
"If North Korea takes military action against South Korea, South Korea will strongly retaliate against North Korea's military," he said, adding the South would easily defeat the North in the event of any war.
Tensions heightened on the peninsula in March following the torpedoing of the Cheonan corvette, which killed 46 sailors. The South, with the backing of Washington, blamed the North for the sinking, but Pyongyang denied any involvement.
Unlike its joint military exercises with the United States off the east coast last month, the South's drills will take place off the west coast in the vicinity the Cheonan sinking.
South Korea said its five-day exercise would involve land, air and naval forces, including 20 submarines and antisubmarine aircraft. Firing drills will also take place on five islands near the Northern Limit Line, a site of several deadly clashes since the 1950-53 Korean War.
"These exercises will serve as an opportunity to complete our combat readiness, so that we can prevent enemy provocation," the South's military said in a statement on Wednesday.
North Korea's state news agency KCNA said the army had adopted a "decisive resolution to counter the reckless naval firing projected by the group of traitors with strong physical retaliation".
NEW COLD WAR?
In a show of force meant to deter any future attack, the South Korean and U.S. militaries held combined drills last month, drawing an angry response from Pyongyang. Retaliatory threats by the North, however, came to nothing.
The drills also angered China, the North's only powerful ally, which said they threatened its security and regional stability.
Last month, in deference to China, the United Nations condemned the Cheonan sinking, but stopped short of blaming North Korea by name.
Hyung-A Kim, a Korean expert at the Australian National University, said the exercises off the peninsula and concurrent air drills by China's military contributed to the makings of an East Asian-style Cold War.
She said the United States and China, the North's closest ally, must transcend the Cheonan incident and work toward reaching a compromise which would enable the resumption of multilateral nuclear talks.
Six-way talks involving North and South Korea, the United States, Japan, Russia and China have been in limbo since 2007 and a 2005 disarmament deal appeared to lose relevance when Pyongyang tested a long-range missile and a nuclear device.
South Koreans have become used to shrill rhetoric from both sides, including threats of war, since conservative President Lee Myung-bak adopted a hard line policy against the North demanding it abandon its nuclear program in return for aid.
"I believe that it is necessary to show a strong stand against North Korea. The military drills, in that sense, are important. We need to build up our national strength," said Cheon Ki-youn, 73, a bus driver in Seoul.