The exercise comes more than a week after North Korea launched four ballistic missiles into the sea off Japan's northwest coast, with one rocket landing about 200 km (124 miles)from the town of Oga.
Friday's drill played out a scenario in which North Korea had fired a ballistic missile on the Japanese islands.
"The missile is seen to have landed within a 20-km (12-mile) boundary west of the Oga peninsula," a speaker blared during the evacuation. "The government is currently examining the damage."
Residents of the largely rural peninsula jutting into the ocean about 450 km (280 miles) north of the capital, Tokyo, made their way to a designated evacuation centre equipped with emergency kits and protective gear.
Schoolchildren in another part of town crouched down to the ground before hurrying inside a gymnasium.
"I've seen missiles flying between foreign countries on television, but I never imagined this would happen to us," said Hideo Motokawa, a 73-year-old who participated in the drill.
Officials said the exercise was prompted by growing concern about the regional security situation.
"Anything can happen these days, and it's even more true when we cannot anticipate the behaviour of our neighbouring countries," said Osamu Saito, a security supervisor in the prefecture of Akita where Oga is located.
North Korea is also developing nuclear-tipped missiles, in defiance of UN Security Council resolutions and sanctions, and conducting nuclear tests in what US Secretary of State Rex Tillerson described during a visit to Japan as an "ever-escalating threat."
Japanese Chief Cabinet Secretary Yoshihide Suga told reporters on Friday the missile drill was worthwhile, to help educate the public.
Some Oga residents worried about how they would react in a real attack.
"It's a scary thing," said participant Emiko Shinzoya, 73. "If it did actually happen, I don't think we can do what we practiced today. We'll just be panicked."
Written by Elaine Lies, Edited by Darren Schuettler and Clarence Fernandez
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)