North Korea fired more than 200 artillery shells from its west coast toward the South's Yeonpyeong island, Seoul's military said.
South Korea ordered civilians to seek shelter on the island before conducting its own fire drills.
The South has condemned the move, calling it a “provocative act”.
In 2010, North Korean artillery fired multiple rounds on Yeonpyeong Island, killing four people.
Artillery shells fired on Friday did not enter South Korean territory until 09:00 to 11:00 local time (00:00 to 02:00 GMT).
South Korea's Joint Chiefs of Staff said the incident “did not cause any damage to our people or military” but added that the action “threatens peace and raises tensions on the Korean Peninsula”.
The shelling follows Pyongyang's warning that it is building up its military arsenal in preparation for war “that could erupt at any time” on the peninsula.
Officials on two nearby islands, Baengnyeong and Daecheong, also told the public to seek shelter.
“North Korea's resumption of its artillery firing exercises inside the demilitarized zone this morning is a provocative act that threatens peace and heightens tensions on the Korean Peninsula,” South Korea's Defense Minister Shin Won-sik said in a statement on Friday.
“Our army must be ready to completely annihilate the enemy so that they do not dare another provocation, and must back up momentum with force,” he said.
His ministry said it had not observed any movement from the North during South Korea's drills.
The latest incident comes months after North Korea completely suspended a military pact with South Korea in a bid to improve ties.
The deal went sour after Pyongyang said it had successfully launched a spy satellite in November. As a result, South Korea partially suspended the agreement, saying it would resume surveillance flights over the border.
Later, Pyongyang said it would withdraw all measures taken to “prevent military conflict in all spheres, including land, sea and air” and deploy “more powerful armed forces and new types of military hardware” along the border.
But North Korea repeatedly violated the accord two years ago, launching missiles and firing artillery shells into the sea in the South's direction. North Korea last fired artillery shells into the sea in December 2022, with nine such incidents that year alone.
So some analysts argue that Pyongyang's official withdrawal from the deal won't make much of a difference.
“Since North Korea did not adhere to the agreement in the first place, there is always the possibility of a limited conflict,” said Jo Bi Yun of the Korea Institute for Defense Analysis.
Yeonpyeong Island, a military base and small population of about 2,000 people, lies 3km (2 miles) from a disputed maritime boundary in the Yellow Sea and 12km from the North Korean coast.
It has been the scene of clashes between Korean navies for years.
In 2010 – North Korea fired dozens of artillery shells at the island, killing two soldiers and two civilians.