The three-day exercise, aimed at tackling provocation by North Korean submarines, is being conducted off the southern island of Jeju, the South's defence ministry said.
"This is the largest joint anti-submarine exercise the allies have ever staged, in terms of its scale and the number of vessels involved," a ministry spokesman told AFP.
The exercise involves more than 10 ships, including a South Korean Aegis destroyer, as well as submarines, surveillance planes and helicopters, he said.
Separately, South Korean artillery units, naval ships and jet fighters conducted a joint live-fire drill off the east coast of Goseong county, just south of the border with North Korea, the ministry said.
The drills come amid growing concern over the expansion of the North's nuclear weapons and ballistic missile programmes.
As well as the SLBM test, Pyongyang recently boasted of its ability to miniaturise a nuclear warhead to fit on high-precision, long-range rockets.
Experts question such claims, but broadly agree that the North is moving ahead quickly with the development of both programmes.
A fully developed SLBM capability would take the North Korean nuclear threat to a new level, allowing deployment far beyond the Korean peninsula and the potential to retaliate in the event of a nuclear attack.
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