The alliance’s defence chiefs said the decision supported “diplomatic effortsto achieve complete denuclearization of the Korean Peninsula”.
A number of exercises were suspended last year after US President Donald Trump met North Korea’s Kim Jong-un.
North Korea regards the games as preparation for a military invasion.
The defence ministers from the US and South Korea agreed to end the Foal Eagle and Key Resolve series of exercises in a phone call on Saturday.
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Critics have said cancelling the drills could undermine US and South Korean military defences against the North, but others say those concerns are unjustified.
President Trump has previously complained of the cost of such exercises, although he has ruled out withdrawing US troops from the peninsula – currently numbering about 30,000.
President Trump said he had to “walk” because the North Koreans had demanded the full lifting of economic sanctions before denuclearisation.
But North Korea’s foreign minister said Kim Jong-un had asked only for partial sanctions relief in exchange for disabling the main nuclear complex at Yongbyon.
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