North Korea fired a single artillery round into the sea near an island on the border with South Korea, officials in Seoul have said.
The shell did not fly across the border, a South Korean military spokesman said, agencies reported.
The firing spread panic among the residents on Yeonpyeong island who fled to shelters. North Korea had shelled the island in 2010, killing four people.
The shellfire was heard from the island of Baengnyeong, and was probably part of a military drill, Reuters reported, citing a South Korean defense ministry official.
"There was a single artillery fire in the North" a defence ministry spokesman told the Agence France-Presse.
"The shell apparently landed on the northern side of the sea border and there was no damage to us."
The incident comes as tensions between Seoul and Pyongyang soared following North Korea's strident military posturing in recent weeks, including a rocket launch and a nuclear test.
'Declaration of war'
The two Koreas are technically at war after a 1950s battle ended in armistice and Seoul is concerned about Pyongyang's pursuit of nuclear weapons and a ballistic missile.
South Korea closed the Kaesong industrial park inside North Korea last week and disconnected water and power supply to the jointly run complex following the missile launch, dealing an economic blow to the North.
Pyongyang ratcheted up the rhetoric saying the shutdown was "a declaration of war" and that it was "kicking out" all South Koreans from the jointly run industrial zone. Pyongyang also designated Kaesong as a 'military zone.
The US, which has announced fresh sanctions against Pyongyang, last week promised Seoul advanced anti-missile hardware Terminal High Altitude Area Defense (THAD) in the light of increasing threats from North.