The warning came after United Nations diplomats said the US and China had struck a tentative deal on a draft UN Security Council sanctions resolution that would punish North Korea for its third nuclear test, which it completed last month.
A spokesman for the Korean People's Army (KPA) Supreme Command warned: "We will nullify the Korean armistice.
"The war exercise being done by the United States and the puppet South Korea is a systematic act of destruction aimed at the Korean armistice."
The two remain technically at war since the conflict ended in a truce, not a peace treaty.
The spokesman added: "We will be suspending the activities of the KPA representative office at Panmunjom (truce village) that had been tentatively operated by our army as the negotiating body to establish a peace regime on the Korean peninsula.
"Related to that, we will be making the decision in parallel to cut off the Panmunjom DPRK-US military hotline."
North Korea, officially called the Democratic People's Republic of Korea (DPRK), has made much of hotlines with the South and the US, but has not been known ever to have used them in times of increased tension.
About 200,000 Korean troops and 10,000 US forces are expected to be mobilised for their defensive Foal Eagle exercise, under the Combined Forces Command, which began on March 1 and goes on until the end of April. Separate computer-simulated drills called Key Resolve start on Monday.
Speaking yesterday, UN diplomats said they hoped to receive the draft resolution on North Korea for that day's council session. They added they would like to see the council vote on it by the end of the week.
The UN press office also said Russia, which holds the presidency of the 15-nation Security Council this month, would convene closed-door consultations on North Korea yesterday.
China's Foreign Ministry declined to confirm it had reached a deal with the US.
Spokeswoman Hua Chunying said: "China supports an appropriate response from the Security Council and oppose North Korea conducting its nuclear test.
"At the same time, we are resolute in believing the relevant response has to be prudent and moderate, has to prevent an escalation, be conducive to the denuclearisation of the Korean peninsula, prevent nuclear proliferation and maintain the peace and stability of north-east Asia."
Council diplomats have said they would like to strengthen the provisions in previous sanctions resolutions adopted after North Korea's 2006 and 2009 nuclear tests, above all those related to the inspection and seizure of shipments of banned items and toughening financial restrictions.
The Security Council condemned North Korea's third nuclear test last month, and vowed to take action.
Pyongyang said at the time the test was an act of self-defence against US hostility" and threatened stronger steps if necessary.
In January, the Security Council passed a resolution expanding UN sanctions against North Korea due to its December rocket launch and warned Pyong-yang against further tests. North Korea responded by threatening a new atomic detonation, which it then carried out the following month. North Korea's previous tests prompted the Security Council to impose new sanctions.
Beijing has supported all previous sanctions resolutions against Pyongyang but only after working hard to dilute proposed measures. It has been concerned tougher sanctions could further weaken the North's economy and prompt refugees to flood into China.