The two countries agreed to suspend a joint military exercise scheduled for August, South Korean and US officials said on Monday.
"South Korea and the United States have agreed to suspend all planning activities regarding the Freedom Guardian military drill scheduled for August," according to a South Korean defence ministry statement.
A Pentagon statement confirmed the suspension and added that there would be a meeting between the secretaries of defence and state as well as Trump's national security adviser on the issue this week.
"Consistent with President Trump's commitment and in concert with our Republic of Korea ally, the United States military has suspended all planning for this August's defensive 'war game' (Freedom Guardian)," the statement said.
Pentagon spokeswoman Dana White said: "We are still coordinating additional actions. No decisions on subsequent war games have been made."
Last year, 17,500 American and more than 50,000 South Korean troops participated in the Ulchi Freedom Guardian drills, although the exercise is mostly focused on computerised simulations rather than live field exercises that use weapons, tanks or aircraft.
The US-South Korean exercise calendar hits a high point every spring with the Foal Eagle and Max Thunder drills, which both wrapped up last month.
The decision to halt military exercises in South Korea has bewildered many current and former US defence officials, who only learned about it when Trump made his remarks.
Japan's Chief Cabinet Secretary Yoshihide Suga said on Tuesday there would be no changes to joint drill plans between the United States and Japan, both of which also engage in regular deterrence exercises against North Korea.
"The United States is in a position to keep its commitment to its allied nations' defence and our understanding is there is no change to the US commitment to the Japan-US alliance and the structure of American troops stationed in Japan," Mr Suga said in a regular briefing.