The "candid" talks formally ended just before midnight, the South's Unification Ministry said, with a decision to continue discussions but no set timetable for doing so.
There was no joint statement.
Although the most important sit-down meeting between the two rivals since 2007 had begun with no fixed agenda, the South had focused on securing the North's commitment to a planned reunion later this month for family members separated by the 1950-53 Korean War.
According to the Unification Ministry, the North side at today's talks in the border truce village of Panmunjom had demanded that the drills be postponed until after the reunion event was over.
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"Our side maintained its position that it cannot accept the North's demands ... Because it runs against our principle that there should be no linkage between purely humanitarian and military issues," the ministry said in a statement.
Today's talks began at 10:00am (0100 GMT) with a brief morning session, followed by three hours of discussions in the afternoon, and a series of one-on-one evening sit-downs between the chief delegates.
The South side was led by top National Security Council official Kim You-Hun, and the North by Won Tong-Yon -- deputy head of a ruling party organisation that handles inter-Korean ties.
Before the talks began, Kim had said he wanted to "explore the chance of opening a new chapter on the Korean peninsula".