North Korea's military routinely responds to US-South Korean exercises.
Tuesday's threat came as top US generals, including Harry Harris, the commander of US forces in the Pacific, visited South Korea.
Ties between the Koreas are almost always fraught, but anxiety is higher than normal following weeks of tit-for-tat threats between US President Donald Trump and Pyongyang in the wake of North Korea's two intercontinental ballistic missile tests last month.
The US generals were to travel to the site of a contentious US missile defence system in South Korea later on Tuesday.
North Korea's military statement said it would launch an unspecified "merciless retaliation and unsparing punishment" on the United States over the Ulchi Freedom Guardian drills that began Monday for an 11-day run.
The North Korean statement accused the US of deploying unspecified "lethal" weapons for the drills that it says involve a "beheading operation" training aimed at removing absolute ruler Kim Jong-un.
"No one can vouch that these huge forces concentrated in South Korea will not go over to an actual war action now that the military tensions have reached an extreme pitch in the Korean Peninsula," the statement said.
"Moreover, high-ranking bosses of the US imperialist aggressor forces flew into South Korea to hold a war confab. Such huddle is increasing the gravity of the situation."
The drills are largely computer-simulated war games held every summer and have drawn furious responses from North Korea.
This year's exercise involves 17,500 American troops and 50,000 South Korean soldiers, according to the US military command in South Korea and Seoul's Defence Ministry.
South Korea's President Moon Jae-in said the drills are defensive in nature and are held regularly because of repeated provocations by North Korea.
Source: News agencies