The ministry made the warning in a white paper due to be released later Tuesday, although defence officials said the nuclear-armed North has yet to demonstrate its miniaturisation capacity.
"North Korea's capabilities of miniaturising nuclear weapons appear to have reached a significant level," the ministry said in a statement.
Pyongyang has conducted three nuclear tests, most recently in February 2013.
The defence ministry said the North had probably secured some 40 kilos (88 pounds) of weapons-grade plutonium by reprocessing spent nuclear fuel rods, and that it is working on a highly enriched uranium programme.
Pyongyang mothballed the five-megawatt reactor at its main Yongbyon nuclear complex in 2007 under an aid-for-disarmament accord, but began renovating it in mid-2013. The facility is the country's main source of weapons grade plutonium.
The North is presumed to have the capacity to developing missiles that could threaten the US mainland, through a series of long-range missile tests, the defence ministry said.
In 2012, Pyongyang demonstrated its rocket capabilities by sending a satellite into orbit, but it has yet to conduct a test that would show it had mastered the re-entry technology required for an inter-continental ballistic missile (ICBM).
Although there is no doubt that North Korea has an extremely active ballistic missile development programme, expert opinion is split on how much progress it has made.
South Korea's Yonhap news agency quoted an unnamed defence ministry official as saying the North's Taepodong-2 long-range missile is believed to have increased its range to 10,000 kilometres (6,200 miles) from the previous estimate of up to 7,000 kilometres.
But no signs have been detected that Pyongyang has put long-range missiles into service, it said.
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