South Korea says one of its naval patrol ships exchanged artillery fire with a North Korean vessel that fired first into waters near the South's vessel.
Military officials in Seoul said Thursday the shells fell south of the Yellow Sea border near the front-line island of Yeonpyeong.
The officials said the South Korean ship, which was not damaged in the incident, returned fire into the water near the North Korean ship, which also was undamaged.
Pyongyang has not commented on the incident, but did threaten Wednesday to attack South Korean ships near the sea border between the two countries.
The threat and the artillery exchange follow an incident earlier this week in which South Korea fired warning shots at three North Korean vessels that crossed the maritime boundary between the two rivals.
North Korea disputes the maritime boundary, saying it was unilaterally imposed and should be drawn farther south.
The Korean War ended in 1953 with an armistice. Hostilities in the conflict ended, but the two sides remain technically at war.