The two-week annual Ulchi Freedom exercise is largely computer-simulated, but still involves around 50,000 Korean and 25,000 US soldiers.
The drill always triggers a spike in tensions on the divided Korean peninsula, and this year it coincides with particularly volatile cross-border relations following a series of high-profile defections.
As the exercise began, South Korean President Park Geun-Hye said the defections signalled domestic turmoil in Pyongyang that could cause North Korea to lash out.
“It is increasingly possible that North Korea may undertake various terror attacks and provocations…to block internal unrest, prevent further defections and create confusion in our society,” Park told a cabinet briefing.
Her comments came a day after the Unification Ministry in Seoul urged all citizens to be on guard against possible North Korean assassination attempts on defectors and anti-Pyongyang activists in the South.
Park said the South Korean military was on high alert and would “vigorously strike back” in the event of any hostile action.
Ulchi Freedom plays out a full-scale invasion scenario by nuclear-armed North Korea and both Seoul and Washington insist it remains purely defensive in nature.
Pyongyang views the drill as wilfully provocative, and the Korean People’s Army (KPA) issued a statement Monday morning, threatening a military response to what it described as a rehearsal for a surprise nuclear attack and invasion of the North.
North Korea’s frontline units were “fully ready to mount a preemptive retaliatory strike at all enemy attack groups involved,” said a spokesman for the KPA General Staff.
The slightest violation of North Korea’s territorial sovereignty would result in the source of the provocation being turned “into a heap of ashes through Korean-style pre-emptive nuclear strike,” the spokesman said.
Seoul voiced regret at the aggressive tone of the KPA statement, with the Unification Ministry urging the North to Korea “break away from provocative actions.”
Pyongyang has made similar nuclear strike threats in the past, but actual retaliation to South Korea-US military drills has largely been restricted to firing ballistic missiles into the sea.
Analysts say the risk of an unintended incident escalating into a military clash is higher this year given the lack of direct communication between the two Koreas.
As tensions rose in the wake of North Korea’s fourth nuclear test in January, Pyongyang shut down the two existing hotlines with South Korea – one used by the military and one for government-to-government communications.
And last month it severed its only direct communications link with the United States when it shut down the so-called “New York channel” which had previously served as a key point of contact between North Korean and US diplomats at the United Nations.
The January nuclear test heightened North Korea’s isolation as the international community, backed by the North’s main diplomatic protector China, imposed substantially upgraded economic sanctions.
Pyongyang has remained defiant, and there are concerns that the leadership will order a show of force in the wake of the latest, headline-grabbing defections.
Last week, North Korea’s deputy ambassador to Britain, Thae Yong-Ho, defected to the South – a rare and damaging loss of diplomatic face for Pyongyang and a major PR victory for Seoul.
The North’s official KCNA news agency described Thae as “human scum” and said he had fled to avoid criminal charges including embezzling funds and raping a minor.
Thae’s move added to Pyongyang’s fury with the defection in April of a dozen North Korean overseas restaurant workers, who it insists were kidnapped by South Korean intelligence.