A live-firing exercise by South Korea passed without incident today despite threats from North Korea of "catastrophic retaliation" if it went ahead.
There was no immediate sign of any North Korean military response during the drill.
The South evacuated hundreds of residents near its land border with the North and sent residents of islands near disputed waters into underground bunkers amid fears of war.
UN diplomats meeting in New York failed to find any solution to the crisis, but there was some sign of diplomacy today, as a high-profile American governor announced what he said were two nuclear concessions from the North.
The live-fire exercises came nearly a month after the North responded to earlier manoeuvres by shelling Yeonpyeong island, killing two marines and two civilians in its first attack targeting civilian areas since the 1950-53 Korean War.
Pyongyang had said it would respond even more harshly to any new drills from the Yellow Sea island, though it added that its strikes would be "unpredictable."
The drills on Yeongpyeong, a tiny enclave of fishing communities and military bases about seven miles from North Korean shores, involved several types of weapons.
The North considers waters around Yeonpyeong its own territory. Similar drills on November 23 sparked the North's artillery barrage, after Pyongyang said the South ignored clear warnings to halt the firing.
Before today's exercise North Korea threatened again to retaliate, accusing South Korea and the US of plotting the manoeuvres to stage a northward invasion.
"South Korea must know how wretched the consequences it will face" by collaborating with the US, Pyongyang's state-run website said.
South Korea's military said ahead of the planned drills that it would "immediately and sternly" deal with any provocation by the North. Fighter jets flew over South Korean airspace to deter North Korean attacks.
After the drills were over, South Korea's Joint Chiefs of Staff issued a statement vowing to bolster its military readiness to defend front-line islands and brace for possible attacks by North Korea.
Residents, local officials and journalists on Yeonpyeong and four other islands had been ordered to evacuate to underground shelters because of possible attacks by North Korea.
Hundreds of South Koreans living near the tense land border with North Korea were either evacuated to bomb shelters or taken to areas farther south ahead of the drills, local officials said.
On Yeonpyeong, residents filed into an underground shelter after authorities announced the drill and huddled on the floor as a South Korean soldier showed them how to use a gas mask.
The UN Security Council failed yesterday to agree on a statement to address rising tensions.
The US and others wanted the council to condemn North Korea for attacks that have helped send relations between the Koreas to their lowest point in decades. But diplomats said China, the North's major ally, strongly objected.
In a diplomatic push, New Mexico Governor Bill Richardson, a frequent unofficial envoy to North Korea and former US ambassador to the UN, held meetings with top leaders in the foreign ministry and military during a four-day visit to Pyongyang. He called for maximum restraint.
Mr Richardson said the North agreed to let UN inspectors visit the North's main nuclear complex to make sure it is not producing enriched uranium for a nuclear bomb.