Nearly two million troops are located on either side of the 4km wide, 245km long border.
'Isolation and deprivation'
Clinton was accompanied by Robert Gates, the US defence secretary, who remarked on the contrast between the prosperous South and the impoverished, communist North.
"In the 20 years since I last climbed that observation tower and looked out across the DMZ, it's stunning how little has changed up there and yet how much South Korea continues to grow and prosper," he said.
"The North, by contrast, stagnates in isolation and deprivation."
The US has also underscored its support for the South in recent days by sending the 97,000-tonne aircraft carrier USS George Washington to take part in military exercises beginning on Sunday in the Sea of Japan.
The drill will involve about 20 ships and 200 fixed-wing aircraft, according to military officials.
North Korea has denounced the exercises as "very dangerous sabre-rattling".
Seoul has blamed Pyongyang for the sinking on the Cheonan in March and has rallied international condemnation of the incident.
The North has denied it is reponsible and a United Nations Security Council statement condemning the sinking did not name North Korea as the culprit, apparently after Chinese pressure.
'Dangerous new period'
In a sign of the heated war of words developing between the two sides, a retired air force general nominated to be the next US intelligence chief on Tuesday warned that the sinking could herald a "dangerous new period" of attacks on the South.
"The most important lesson for all of us in the intelligence community from this year's provocations by Pyongyang is to realise that we may be entering a dangerous new period when North Korea will once again attempt to advance its internal and external political goals through direct attacks on our allies in the Republic of Korea," James Clapper wrote.
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"Coupled with this is a renewed realisation that North Korea's military forces pose a threat that cannot be taken lightly," he said in a written response to questions from a senate committee.
Clapper, who currently serves as intelligence adviser to Gates and the Pentagon's liaison to the director of national intelligence, was a senior defence official dealing with North-South tensions on the Korean Peninsula in the 1980s.
However, Don Kirk, the Koreas correspondent for the Christian Science Monitor newspaper, told Al Jazeera that the claim that North Korea's behaviour may turn even more aggressive is overstated.
"I don't think North Korea is in a position to stage more attacks. The country is facing severe economic problems, and also, China is trying to hold North Korea in check," he said.
"I think that after these military exercises are held, the whole direction will be towards six-party talks on its nuclear programme."
Despite the strong rhetoric, US defence and intelligence officials acknowledge options are limited in dealing with North Korea and Pyongyang has recently signalled it wants a return to the nuclear talks.
Analysts say Washington and Seoul are reluctant to head back into the nuclear talks, which the North has previously used to extract benefits from the international community while still pressing ahead with efforts to develop a nuclear arsenal.
But they may have little choice with Washington nervous about North Korea's potential to export atomic weapons.