North Korea says its recent ballistic missile launches tested nuclear detonators which could be used in pre-emptive strikes against the South.
The tests on Tuesday had been personally ordered and monitored by leader Kim Jong-un, the North's official KCNA news agency said.
They were seen as a reaction to the planned deployment of a US missile defence system in Seoul.
The US, Japan and Seoul have condemned the exercise.
The launch of the two Scud missiles and one intermediate-range Rodong or Nodong missile were a violation of existing UN resolutions.
The three ballistic missiles flew between 500km (300 miles) and 600km into the sea off its east coast, US and South Korean officials said.
"The drill was conducted by limiting the firing range under the simulated conditions of making pre-emptive strikes at ports and airfields in the operational theatre in South Korea where the US imperialists' nuclear war hardware is to be hurled," said KCNA.
"It examined the operational features of the detonating devices of nuclear warheads mounted on the ballistic rockets at the designated altitude over the target area", the news agency added.
'A physical response'
The exercise was seen as a response to a decision by South Korea and the US to deploy the Terminal High Altitude Area Defence (THAAD) anti-missile system to counter the threat from Pyongyang.
North Korea had earlier threatened a "physical response" to the move.
Tuesday's exercise was the latest in a series of missile tests by North Korea.
UN Secretary-General Ban Ki-moon said it had been "deeply troubling" and undermined efforts to reduce tension on the Korean peninsula.
Pyongyang had earlier tested a ballistic missile on 9 July, on the back of a test of a powerful new medium-range missile on the 22 June.
Both missiles achieved a significant increase in flight distances, and were believed to be theoretically capable of reaching US bases as far away as Guam.
South Korean officials also believe the North is preparing to conduct a fifth underground test of a nuclear weapon.