It is the second time in a month that Pyongyang has carried out such exercises.
South Korea’s defense ministry said it was notified early on Tuesday that drills would take place near two islands west of the Korean peninsula.
A South Korean spokesman said its military was “fully prepared”.
Firing began around 14:00, Reuters news agency quoted a military official as saying, and so far, no rounds had fallen south of the border.
That was the trigger last month for the South Koreans to return fire.
The area has long been a flashpoint between the two Koreas. The UN drew the western border after the Korean War, but North Korea has never recognized it.
A similar North Korean exercise at the end of March resulted in the two sides exchanging hundreds of rounds of artillery fire.
“The North notified us there would be live-fire drills today north of the [border] near Yeonpyeong and Baengnyeong islands,” a defense ministry spokesman told AFP news agency.
Both islands are hotspots. In November 2010, North Korea fired shells at Yeonpyeong, killing two marines and two civilians, in what it said was a response to South Korean military exercises.
Earlier that year, a South Korean warship sank near Baengnyeong island with the loss of 46 lives.
Seoul says Pyongyang torpedoed the vessel but North Korea denies any role in the incident.
This latest move from North Korea comes as satellite images suggest Pyongyang could be preparing to carry out a nuclear test.
South Korea’s military said it had recently detected “a lot of activity” at the North’s Punggye-ri test site.
The test, if it went ahead, would be Pyongyang’s fourth, after tests in 2006, 2009 and 2013.
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