The Lynx helicopter sent out a distress signal and disappeared from radar shortly after taking off from a warship on the East Sea (Sea of Japan) at around 12.00 GMT, a ministry spokesman said.
The aircraft apparently crashed into the sea, he said, adding search efforts were underway to find the three who were on board, including the pilot.
Today's joint naval exercise was the latest display of military might in reponse to North Korea's fifth nuclear test earlier this month, which raised tension on the peninsula.
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