The annual Ulchi Freedom exercise, which the defence ministry said would run through August 28, is largely computer-simulated, but still involves 50,000 Korean and 30,000 US soldiers.
The drill plays out a full-scale invasion scenario by nuclear-armed North Korea and both Seoul and Washington insist it remains purely defensive in nature.
Pyongyang views Ulchi Freedom - along with other annual South Korea-US drills - as wilfully provocative and has threatened the "strongest military counter-action" should this year's exercise go ahead.
The committee specifically warned of the drill's potential for an accidental military clash that could trigger an "all-out" conflict.
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Military tensions are already running high along the Korean peninsula after South Korea blamed the North for mine blasts that maimed members of a border patrol earlier this month.
The South retaliated by resuming high-decibel propaganda broadcasts across the border, using batteries of loudspeakers that had lain silent for more than a decade.
According to the South's defence ministry, this year's Ulchi Freedom drill will place a particular emphasis on reconnaissance and intelligence assets to strengthen monitoring of the heavily-militarised frontier.
The rising tensions were expected to top the agenda of a National Security Council convened and chaired this morning by President Park Geun-Hye.
In a speech to mark the anniversary Saturday of the Korean peninsula's 1945 liberation from Japanese rule, Park described the landmine attack as a serious breach of the armistice that ended the 1950-53 Korean War, and vowed a tough response to any further provocation by the North.
Because the 1953 armistice was never replaced by a full peace treaty, the two Koreas technically remain at war.
The 70th anniversary of liberation was celebrated by both Koreas, and there had been hopes earlier this year that the event might offer the opportunity for some diplomatic fence building.