Tourists continued to arrive in Pyongyang despite the war hysteria.
Mark Fahey of Sydney, Australia, said he was not concerned about a possible war.
"I knew that when I arrived here it would probably be very different to the way it was being reported in the media," he told The Associated Press at Pyongyang airport. He said his family trusts him to make the right judgment but "my colleagues at work think I am crazy."
Chu Kang Jin, a Pyongyang resident, said everything is calm in the city.
"Everyone, including me, is determined to turn out as one to fight for national reunification ... if the enemies spark a war," he said, in a typically nationalist rhetoric that most North Koreans use while speaking to the media.
In Seoul, Presidential spokeswoman Kim Haing told reporters that the North Korean warning amounted to "psychological warfare."
"We know that foreigners residing in South Korea as well as our nationals are unfazed," she said.
South Korean President Park Geun-hye, who has sought to re-engage North Korea with dialogue and aid since taking office in February, expressed exasperation Tuesday with what she called the "endless vicious cycle" of Seoul answering Pyongyang's hostile behavior with compromise, only to get more hostility.
U.N. Secretary-General Ban Ki-moon on Tuesday described the tensions as "very dangerous," and said that any small incident caused by miscalculation may "create an uncontrollable situation."
Also Tuesday, North Korea said it was suspending work at the Kaesong industrial park near its border, which is combines South Korean technology and know-how with North Korea's cheap labor. North Korea pulled out more than 50,000 workers from the complex, the only remaining product of economic cooperation between the two countries that started about a decade ago when relations were much warmer.
Other projects from previous eras of cooperation such as reunions of families separated by war and tours to a scenic North Korean mountain stopped in recent years.