Pyongyang lashed out after Hillary Clinton, the US secretary of State, laid out plans for new sanctions against North Korea to Asian leaders attending a regional security summit in Hanoi.
Mrs Clinton said North Korea had embarked on a "campaign of provocative, dangerous behaviour" and described the rogue state as "isolated and belligerent".
Replying to Mrs Clinton, Ri Tong-il, North Korea's representative at the regional security summit, warned that the US was harking back to the days of "gunboat diplomacy" and said there would be "a physical response to the steps imposed by the United States militarily."
He said the military drills involving South Korea, Japan and the US were "another expression of hostile policy against North Korea". There was no sign of contact between US and North Korean delegates at the summit, which has in the past been a venue for rare talks between the two sides.
China has also opposed the naval drills in the Yellow Sea, worried that the US will take the chance to reconnoitre Chinese submarine routes in the region.
On Wednesday, Mrs Clinton announced that the US would attempt to target the ruling regime in Pyongyang with new sanctions as a punishment for the sinking of the Cheonan, a South Korean warship, which was torpedoed in March with the loss of 46 men. North Korea has denied any involvement in the incident. The new sanctions will target counterfeit cigarettes and money-laundering in order to cut off the cash flow of North Korean officials.
Mrs Clinton also urged Asian leaders to put pressure on the military junta in Burma.
"What's happening in Burma is not only dangerous for the people who endure life under the regime, though they are first and foremost on our minds," Mrs Clinton said. There was also a direct link, she said, between open and free societies and political and economic stability.