North Korea says it will use its "nuclear deterrent" in response to joint US-South Korean military exercises this weekend.
Pyongyang was ready to launch a "retaliatory sacred war" at any time, the state-run Korean Central News Agency (KCNA) said.
Washington and Seoul say the war games are to deter North Korean aggression.
Tensions between the two Koreas have been high since the sinking of a South Korean warship in March.
An international investigation said the ship was sunk by a North Korean torpedo, a claim strongly denied by Pyongyang.
Responding to Pyongyang's warning, US State Department spokesman Philip Crowley said that Washington was "not interested in a war of words with North Korea".
"What we need from North Korea is fewer provocative words and more constructive action," the spokesman added.
The BBC's John Sudworth, in Seoul, says this is not the first time that North Korea has issued such a warning.
Although it is likely to be dismissed as the usual diplomatic brinkmanship, the rising tension will cause concern among governments in the region, he adds.
'War of words'
The North's powerful National Defence Commission said the war games were "nothing but outright provocations aimed to stifle the Democratic People's Republic of Korea [North Korea] by force of arms," the KCNA reported.
"The army and people of the DPRK will start a retaliatory sacred war of their own style based on nuclear deterrent any time necessary in order to counter the US imperialists and the South Korean puppet forces deliberately pushing the situation to the brink of a war," it added.
The North had already promised a physical response to the military exercises during an Asian regional security forum in Vietnam on Friday.
North Korea's delegation spokesman at the Association of South East Asian Nations (Asean) regional forum said the exercises were an example of 19th century "gunboat diplomacy".
"It is a threat to the Korean peninsula and the region of Asia as a whole," he said.
The forum was dominated by the crisis between the two Koreas.
The war games - which begin on Sunday - will involve the aircraft carrier USS George Washington, 20 other ships and submarines, 100 aircraft and 8,000 personnel.
China has criticised the plans and warned against any action which might "exacerbate regional tensions".
But Japan is sending four military observers, in an apparent endorsement of the drills.
The US announced on Wednesday that it was to impose new sanctions on North Korea, aimed at halting nuclear proliferation and the import of luxury goods.