The disputed sea border has been a constant source of tension
North and South Korea have exchanged fire close to their disputed maritime border, say reports.
North Korea twice fired artillery shells into the sea off the South's western coast, said South Korean media.
South Korean coastal bases responded to the first volley with warning shots, but no injuries were reported.
The North said the firing had been part of an annual military drill and firing would continue, but Seoul said the action was "provocative".
It came after North Korea declared a no-sail zone in waters off its coast on Tuesday, media reports say.
The North fired into waters near the border just after 0900 local time (2400 GMT), a spokesman for South Korea's Joint Chiefs of Staff told the AFP news agency.
"Our military immediately fired back in response," a Seoul presidential official said, on condition of anonymity.
He said the North's initial artillery rounds landed north of the sea border, while Seoul's forces fired at the rounds while they were in the air, AFP reports.
A statement carried by the official North Korean Central News Agency says its drills "will go on in the same waters in the future, too".
Just hours after the initial exchange, reports from South Korea said that the North had fired more shells in the direction of the disputed border. It is not clear where they landed.
South Korea officials said the exchange caused no casualties or damage.
John Sudworth, BBC News, Seoul
As the first 30 or so North Korean shells splashed down into the Yellow Sea, the plumes of water were close enough to have been visible from South Korea's coastal gun positions.
South Koreans live with the knowledge that the North has thousands of artillery pieces along the border that could destroy much of Seoul in a matter of hours.
But this incident is being seen as a crude piece of military diplomacy rather than a direct threat, another example of the North's strategy of escalating tension to strengthen its negotiating hand.
The defence ministry in Seoul said the North had "committed a gravely provocative act" by declaring the no-sail zones in the region.
"We expressed grave concerns over the North's threatening behaviour and demanded an immediate halt to all such activities," AFP quoted the ministry as saying.
"The military will strongly react to any provocative acts by the North and all the responsibility for consequences will rest with the Northern side."
The western sea border is a constant source of military tension between the two Koreas.
There have been three deadly exchanges between the two Koreas along the sea border in the past decade.
In the most recent incident, last November, their navies fought a brief gun battle that left one North Korean sailor dead and three others wounded.
The BBC's John Sudworth in Seoul says the latest incident is being seen as an attempt by North Korea to increase tension in order to gain diplomatic concessions.
South Korea recognises the Northern Limit Line, drawn unilaterally to by the US-led United Nations Command to demarcate the seas border at the end of the 1950-53 Korean War. The line has never been accepted by North Korea.
Relations between the two Koreas have fluctuated in recent months. Talks about their jointly-run Kaesong industrial estate closed without agreement on 21 January.
The attempt at dialogue took place amid fresh tensions apparently provoked by a South Korean think tank's analysis of a likely military coup or mass uprising in the North when the North's leader Kim Jong-il dies.
North Korea did recently accept a small amount of aid from South Korea however.
The US, China, Russia, Japan and South Korea speak regularly of their hopes that North Korea will rejoin international talks about ending its nuclear programme.