The North's National Defence Commission (NDC) described the exercise as "unpardonable war hysteria" and said its army and people would "foil" the US and South Korean moves with "a sacred war of our own style".
The threat is the latest instance of Pyongyang taking a hostile tone towards Seoul since Kim Jong-Un, the youngest son of the late leader Kim Jong-Il, took over following the death of his father in December.
Last week the North vowed "merciless retaliatory strikes" if any shells landed in waters claimed by Pyongyang during a live-fire artillery exercise near the disputed Yellow Sea border.
But in the event it took no military action in response to the drill.
The United States and South Korea are to begin two major annual joint military exercises in the coming week.
Key Resolve, a computerised command post exercise, will start on Monday and continue until March 9. Separately, the joint air, ground and naval field training exercise Foal Eagle will be held from March 1 to April 30.
"Key Resolve and Foal Eagle are unpardonable war hysteria kicked up by the hooligans to desecrate our mourning period and an unpardonable infringement upon our sovereignty and dignity," the NDC said in a statement.
Kim Jong-Il died of a heart attack on December 17.
"Our army and people will foil the moves of the group of traitors to the nation and warmongers at home and abroad for a new war with a sacred war of our own style," the NDC said, indicating it would stage a counter exercise.
"War manoeuvres... are, in essence, a silent declaration of a war. The declaration of the war is bound to be accompanied by a corresponding physical retaliation," it said.
"Now that a war has been declared against us, the army and people are firmly determined to counter it with a sacred war of our own style and protect the security of the nation and the peace of the country," the NDC said.
It flexed its muscle against "US imperialists" accusing Washington of intensifying moves to ignite a war.
"Nuclear weapons are not the monopoly of the US. We have war means more powerful than the US nukes and ultra-modern striking equipment which no one has ever possessed," it said.
"The US is sadly mistaken if it thinks it is safe as its mainland is far away across the ocean. There is no limit to the striking intensity and range of our army and people to wipe out the aggressors," it added.
Professor Kim Yong-Hyun of the Dongguk University in Seoul said the North's statement was aimed at heaping pressure on the United States and South Korea over the exercise while seeking solidarity among its people.
"However, it is unlikely for the North to commit militarily provocative actions as it needs to push forward with dialogue with the United States," he told AFP.
Professor Yang Moo-Jin of the University of North Korean Studies said Pyongyang was seeking to add urgency to the need for negotiations on the North's controversial nuclear programmes.
"Basically, it is telling the United States like this – You'd better not miss this opportunity. Otherwise, we will further build up our nuclear deterrence including ICBMs," Yang said, referring to intercontinental ballistic missiles.
US and North Korean officials this month resumed negotiations aimed at reopening six-party talks on disarming the North in return for diplomatic and economic gains.
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