"Our military is currently detecting a lot of activity in and around the Punggye-ri nuclear test site," defence ministry spokesman Kim Min-Seok told a press briefing.
Kim stressed that North Korea's nuclear weapons programme was at a stage where it could conduct a test "at any moment" once the order was given by the leadership in Pyongyang.
North Korea has conducted three nuclear tests -- in 2006, 2009 and 2013 -- all at the Punggye-ri site in the northeast of the country.
Kim declined to give details of the monitored activity, but cautioned that it may be no more than a "deception tactic" to raise tensions ahead of Obama's visit which is due to begin on Friday.
"We are thinking of possibilities that the North may stage a surprise nuclear test or just pretend to stage a nuclear test," Kim said.
Obama is visiting Seoul as part of an Asia tour, and there has been widespread speculation that the North may stage a provocation to coincide with the trip.
Kim said the South Korean and US militaries were closely sharing intelligence and Seoul's Joint Chiefs of Staff had set up a special task force in case Pyongyang goes ahead with an underground detonation.
"We plan to thoroughly prepare for a fourth nuclear test or any other form of provocation," Kim said.
On Monday, Pyongyang slammed Obama's upcoming trip as a "dangerous" move that would escalate military tension and bring the "dark clouds of a nuclear arms race" over the Korean peninsula.
Several analysts said they were sceptical that North Korea would carry out a test at the current time, and said Pyongyang was just seeking to rattle a few cages during the Obama visit.
Professor Yang Moo-Jin of the University of North Korean Studies in Seoul, said a test now would risk permanently alienating the North's only major ally and chief economic benefactor, China.
"It would be a huge slap in the face for China and North Korea may not feel confident enough to deal with the backlash from Beijing," Yang said.
A nuclear test would extinguish any chance of a resumption of six-country talks on North Korea's nuclear programme that China has been pushing for.
Other parties to the stalled discussions -- most notably a sceptical South Korea and the US -- insist Pyongyang must first make a tangible step towards denuclearisation.
"The diplomatic backlash from another nuclear test might be hard for the North to cope with," agreed Kim Yong-Hyun, a North Korean expert at DongGuk University.
"I think this is more likely North Korea posturing to get some international attention," Kim said.
The North warned late last month that it would not rule out a "new form" of nuclear test after the UN Security Council condemned its latest series of medium-range missile launches.
Experts saw this as a possible reference to testing a uranium-based device or a miniaturised warhead small enough to fit on a ballistic missile.