The exercise was overseen by North leader Kim Jong-un, said the KCNA state news agency, who called on the military to be ready to "ruthlessly" destroy the government in South.
It is the latest in a series of angry gestures by Pyongyang.
The South's President Park Geun-Hye has ordered the army to be on alert.
But she said on Thursday that "reckless provocations will only become a path to self-destruction for the North Korean regime".
North Korea has been reacting after the UN imposed some of its toughest sanctions following its nuclear and long-range rocket tests.
Pyongyang has also been angered, as it is annually, by joint US-South Korean military exercises taking place south of the border.
Already known for vitriolic language, the KCNA report threatened to turn the South's presidential residence, known as the Blue House, into a "sea of flames and ashes".
"Artillery shells flew like lightning and intensely and fiercely struck targets simulating Cheong Wa Dae and rebel governing bodies in Seoul," it said of the latest drill, using the Korean name for the Blue House.
It was not clear when the drill was carried out, but the report warned of a "miserable end" for President Park.
The Blue House was attacked by North Korean commandos in 1968.
The attempt to assassinate then-President Park Chung-hee was unsuccessful, but seven South Koreans and most of the 31 North Koreans attackers were killed.

The three-time champion jockey, 32, has not put a timescale on his return to the saddle.
"I'm not going to rush it," he said. "I want to be 100% for all the major races in the autumn."
Moore looks set to miss York's four-day Ebor Festival, one of the biggest fixtures on the flat-racing calendar, which begins on 17 August.
The major autumn races include the Prix de l'Arc de Triomphe, British Champions Day, the Breeders' Cup and the Melbourne Cup.
The lay-off will damage his chances of winning the jockeys' championship for a fourth time.
Moore, the number one rider for Irish trainer Aidan O'Brien, is second with 57 winners this year, two behind Silvestre de Sousa.
He finished as top rider at the recent Goodwood Festival with eight victories.
"I have been a bit sore for the last couple of weeks and been advised by a specialist that complete rest is the best option," he added.
"I'm going to play it by ear, but hope to be back soon."
Moore was sidelined for two months last year with a neck injury.
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The Â£42m MV Loch Seaforth made its first passenger sailing last month but is still in a "test period" and not fully in service.
Thursday's fault took five hours to fix and the ferry was cleared again for sailings.
Another ferry, the Isle of Lewis, took the passengers involved.
Bad weather has led the cancellations of Friday sailings on the Stornoway-Ullapool route and other services on Scotland's west coast.
Ferry operator Caledonian MacBrayne said withdrawing the Loch Seaforth had been an operational decision and the fault would not have prevented the ship from sailing.
A spokesman said: "Yesterday evening an issue arose with an engine room ventilation fan which required attention and an operational decision was taken to remove her from the route while it was fixed.
"While passengers were delayed, and we regret any inconvenience to them, no-one was stranded."
A spokesman added: "This was not a major issue but it required around five hours of work as the fan was in a difficult to reach location."
North Korea says its has carried out a live-fire artillery drill simulating an attack on the official residence of the South Korean president.
[NEXT_CONCEPT]
Leading flat jockey Ryan Moore has been advised to take "complete rest" as he recovers from a hip injury.
[NEXT_CONCEPT]
A new ferry built for the Stornoway to Ullapool route was temporarily withdrawn from passenger duties because of a faulty ventilation fan.