The US made a "declaration of war" by putting the North Korean leader Kim Jong-Un on a sanctions blacklist, Pyongyang has claimed.
Taking the action, Washington accused the dictator of overseeing widespread human rights abuses, which had made the isolated communist state "among the world's most repressive countries".
In response, North Korea severed its official lines of communication with the US and said dealings between the two nations must now be dealt with under "war law".
Han Song Ryol of the North's foreign ministry said: "The Obama administration went so far to have the impudence to challenge the supreme dignity of the Democratic People's Republic of Korea in order to get rid of its unfavourable position during the political and military showdown with the DPRK.
"The United States has crossed the red line in our showdown.
"We regard this thrice-cursed crime as a declaration of war."
The sanctions imposed on Kim placed a freeze on any properties he may own in America and prevented him from doing business with US citizens.
Ten high ranking North Korean were also blacklisted by the US over alleged human rights abuses.
Political prison camps across North Korea are estimated to hold between 80,000 and 120,000 detainees, including children.
The clampdown comes ahead of US-South Korean military exercises which are set to take place in August.
North Korea has claimed the war games include training designed to prepare troops for the invasion of Pyongyang and "decapitation strikes" aimed at killing its leadership.
Mr Han added: "By doing these kinds of vicious and hostile acts toward the DPRK, the US has already declared war against the DPRK.
"So it is our self-defensive right and justifiable action to respond in a very hard way.
"We are all prepared for war, and we are all prepared for peace.
"If the United States forces those kinds of large-scale exercises in August, then the situation caused by that will be the responsibility of the United States."
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