The decision announced by both countries Sunday came three days after a high-stakes summit between President Donald Trump and North Korean leader Kim Jong Un in Vietnam without any agreement.
The Pentagon says the U.S. and South Korean defense chiefs decided to conclude the Key Resolve and Foal Eagle series of exercise.
It says the allies agreed to maintain firm military readiness through newly designed command post exercises and revised field training programs.
Seoul's Defense Ministry released a similar statement.
North Korea has called the allies' drills an invasion rehearsal and responded with its own costly military exercises.