US experts said the device could reach Alaska, and the launch, which came as Americans prepared to mark Independence Day, triggered a Twitter outburst from President Donald Trump who urged China to 'end this nonsense once and for all'.
The North's possession of a working ICBM something that Trump has vowed 'won't happen' would force a fundamental recalculation of the strategic threat posed by the isolated, impoverished state.
The 'landmark' test of a Hwasong-14 missile was overseen by leader Kim Jong-Un, an emotional female announcer said on state Korean Central Television.
The broadcaster showed his handwritten order to carry out the launch, and pictures of him grinning in celebration, clenching his fist.
The rocket was "a very powerful ICBM that can strike any place in the world", the announcer said, and "a major breakthrough in the history of our republic".
In a statement the North's Academy of Defence Science, which developed the missile, said it reached an altitude of 2,802 kilometres and flew 933 kilometres, calling it the "final gate to rounding off the state nuclear force".
There are still doubts whether the North can miniaturise a nuclear weapon sufficiently to fit it onto a missile nose cone, or if it has mastered the technology needed for it to survive the difficult re entry into the Earth's atmosphere.
But the country has made great progress in its missile capabilities since the ascension to power of Kim, who has overseen three nuclear tests and multiple rocket launches.
In response to the launch but before the announcement, Trump asked on Twitter: "Does this guy have anything better to do with his life?"
The United Nations has imposed multiple sets of sanctions on Pyongyang, which retorts that it needs nuclear arms to defend itself against the threat of invasion.
All of Alaska
US Pacific Command confirmed the test and said it was a land-based, intermediate range missile that flew for 37 minutes before splashing down in the Sea of Japan, adding the launch did not pose a threat to North America.
It came down in Japan's exclusive economic zone and was estimated to have reached an altitude that 'greatly exceeded' 2,500 kilometres, Tokyo said, prompting arms control specialist Jeffrey Lewis to respond on Twitter: "That's it. It's an ICBM. An ICBM that can hit Anchorage not San Francisco, but still."
David Wright, of the Union of Concerned Scientists, wrote on the organisation's allthingsnuclear blog that the available figures implied the missile had "a maximum range of roughly 6,700 km on a standard trajectory".
Japanese Prime Minister Shinzo Abe told reporters: "This launch clearly shows that the threat has grown."
The US, Japan and South Korea will hold a summit on the issue on the sidelines of this week's G20 meeting, he added. "Also I will encourage President Xi Jinping and President Putin to take more constructive measures."
South Korea's President Moon Jae-In, who backs both engagement with the North to bring it to the negotiating table and sanctions, and met Trump for a summit in Washington at the weekend, strongly condemned what he called an 'irresponsible provocation'.
Beijing called for 'restraint', and hit back at Trump's Tweet, saying it had made 'relentless efforts' on North Korea.
Washington, South Korea's security guarantor, has more than 28,000 troops in the country to defend it from its communist neighbour, and fears of conflict reached a peak earlier this year as the Trump administration suggested military action was an option under consideration.
There has also been anger in the United States over the death of Otto Warmbier, an American student detained in North Korea for around 18 months before he was returned home in a coma in June.
Trump has been pinning his hopes on China North Korea's main diplomatically to bring pressure to bear on Pyongyang.
Last week he declared that Beijing's efforts had failed, but returned to the idea on Twitter following the launch: "Perhaps China will put a heavy move on North Korea and end this nonsense once and for all!"
But a former foreign policy adviser to Hillary Clinton warned that his comments risked undermining the credibility of both the US deterrent, and its assurances to its allies in Seoul and Tokyo.
She added: "Picking a twitter fight with a nuclear armed dictator is not wise this is not reality TV anymore."
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)