Washington will "have to undertake careful deliberations about the fate of the planned North Korea-US summit in light of this provocative military" said the North's official news agency KCNA on Tuesday.
"This exercise, targeting us, which is being carried out across South Korea, is a flagrant challenge to the Panmunjom Declaration and an intentional military provocation running counter to the positive political development on the Korean Peninsula," it added.
Shortly after the announcement, Washington said that it was continuing with preparations for meeting between Trump and Kim.
"We will continue to plan the meeting," said State Department spokeswoman Heather Nauert, adding that US had received "no notification" of the meeting's cancelation from Pyongyang.
"We have not heard anything from that government or the government of South Korea to indicate we would not continue conducting these exercises or would not continue planning for our meeting between President Trump and Kim Jong-un next month," she added.
The summit has been scheduled between Kim and US President Donald Trump in Singapore on June 12.
According to South Korea's Yonhap news agency on Tuesday, Pyongyang also cancelled high-level talks set for Wednesday with Seoul over the US and the South's Max Thunder joint military exercises.
The KCNA referred to the military exercises a "provocation" and said that it had no choice but to cancel the talks.
The canceled meeting was aimed at implementing a declaration resulting from an April 27 inter-Korea summit, which included vows to end the Korean War and pursue "complete denuclearization."
Following the statement the North said that the meeting will be held at a yet to be announced date.
Earlier, South Korea announced an agreement with the North to hold high-level inter-Korea talks on measures to bring about denuclearization on the Korean Peninsula.
The meeting, proposed by North Korea, marks the latest in a series of steps that have prompted optimism that the 70-year-old hostilities on the Korean Peninsula may finally come to an end.
North Korean leader Kim Jong-un met with South Korean President Moon Jae-in in a historic summit last month. They issuedthedeclarationat the end of the summit. Moon has also said Kim has promised to give up its nuclear program.
The two sides have been reaching out to one another since January. Until then, inter-Korea relations were marked by hostility and permanent fears of war.
The United States, which has substantial presence in the region, was on a war footing with the North on a permanent basis.
But relations have dramatically improved in the past four months and a half.
Pyongyang has also announced plans to dismantle its Punggye-ri nuclear test site by the end of May, prior to the North Korea-US summit meeting. It has also suspended its missile and nuclear programs but has not publicly committed to abandoning those programs.
