"North Korea launched a projectile which was believed to be a submarine-launched ballistic missile (SLBM) around 6:30 pm (0930 GMT) in the East Sea (Sea of Japan) near the northeastern port of Sinpo", a defence ministry spokesman said.
"We are keeping close tabs on the North Korean military and maintaining a full defence posture", he said.
The missile flew 30 kilometres (18 miles) but the launch "appeared to have failed," he added.
North Korea has been pushing to acquire SLBM capability that would take its nuclear strike threat to a new level, allowing deployment far beyond the Korean peninsula and the potential to retaliate in the event of a nuclear attack.
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The test-firing comes as North Korea gears up for a rare and much-hyped ruling party congress early next month, at which leader Kim Jong-Un is expected to take credit for pushing the country's nuclear weapons programme to new heights.
Numerous analysts have suggested the regime might carry out a fifth nuclear test as a display of defiance and strength just before the congress opens.
Tension has been high on the divided Korean peninsula since Pyongyang's fourth nuclear test in January and rocket launch a month later that was widely seen as a disguised ballistic missile test.
Pyongyang has responded by staging a series of short- and mid-range missile tests and claiming a series of significant technical breakthroughs in its nuclear strike capability.
It claimed it had miniaturised a nuclear warhead to fit on a missile and successfully tested an engine designed for an inter-continental ballistic missile that could reach the US mainland.
While some experts say the claims are exaggerated, most acknowledge that the North's nuclear and ballistic missile programmes have made significant strides.