North Korea has fired shells into disputed waters near a South Korean warship, South Korean military officials told media.
This happened near Yeonpyeong island, on the disputed western maritime border, Yonhap news agency said.
On Tuesday, South Korea fired warning shots at three North Korean ships that crossed the maritime border. The North had said it would retaliate.
In 2010, North Korean shelling of Yeonpyeong killed four people.
The latest incident happened after 18:00 local time (09:00GMT) on Thursday, reports citing South Korean officials said.
"The shells fell near our ship which has been on regular patrol in our territory, but it did not cause any damage to our ship," a spokesman from South Korea's defence ministry told the Agence-France Presse news agency.
According to local news reports, South Korean forces fired several shells into northern waters in response.
Local television network YTN reported that residents on Yeonpyeong were being evacuated to bomb shelters.
Tensions have been rising again between the two neighbours recently, with Pyongyang directing shrill insults at the leaders in Seoul and Washington, says the BBC's Lucy Williamson in Seoul.
The North and South regularly conduct drills near the western sea border, which has long been a flashpoint between the two Koreas.
The UN drew the border after the Korean War, but North Korea has never recognised it.
Since the war ended in an armistice rather than a peace treaty, the two sides remain technically at war.
In March, the two countries traded artillery fire across the border.
North Korea killed two civilians and two marines in the 2010 shelling of Yeonpyeong island, which it said was in response to South Korean military exercises.
Earlier that year, a South Korean warship sank near Baengnyeong island, leaving 46 people dead. Seoul says Pyongyang torpedoed the vessel, but North Korea denies any role in the incident.
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