The Pakistan Air Force is conducting the 'Saffron Bandit' exercise with elements from the Army Aviation and Army Air Defence.
While visiting formations engaged in the wargame, Joint Chiefs of Staff Committee Chairman Gen Khalid Shamim Wynne said the armed forces were "well prepared to defend our sovereignty and territorial integrity."
"The prevailing complex global geo-political environment and regional threat situation are not only unique but also more challenging, since we face both internal and external threats," Wynne was quoted as saying in an official statement.
"Therefore, readiness and war preparedness have attained enhanced significance," said Wynne, Pakistan's second highest ranking military officer.
The exercise is being conducted against the backdrop of heightened tensions between India and Pakistan following a string of ceasefire violations along the Line of Control in Jammu and Kashmir.
The Saffron Bandit exercise is held every three years.
PAF chief, Air Chief Marshal Tahir Butt, participated in the exercise to gauge the preparedness of combat squadrons.
Butt piloted a F-16 combat jet for a simulated strike mission.
Gen Wynne flew in an airborne early warning and control aircraft yesterday to observe the "employment of integrated air and ground combat elements" while army chief Gen Ashfaq Parvez Kayani too visited the exercise areas.
Wynne said the exercise would help enhance Pakistan's "preparedness in the hi-tech scenario of aerial warfare."