"If the North commits any additional provocations against the South, we will make sure that it pays a dear price without fail," he said in a nationally televised address.
"We are aware of the historic lesson that a disgraceful peace achieved through intimidation only brings about greater harm in the end."
South Korea has reportedly deployed more long-range artillery and rocket launchers on Yeonpyeong Island, a border island struck by a North Korean shelling last week, according to military officials.
The officials' remarks were reported Monday by the Yonhap news agency in Seoul.
The report comes as joint military exercises between South Korea and the United States continue in the Yellow Sea and tensions with North Korea continue to brew.
Lee said Monday that South Korea "cannot remain patient" in the face of continued hostility from Pyongyang.
"Fellow citizens, at this point, actions are more important than words," Lee said in a televised address. "Please have trust in the government and the military and support us."
The divided peninsula -- tense at the best of times -- has been near the boiling point since Tuesday, when four people died in a North Korean artillery barrage that targeted Yeonpyeong Island.
Lee called the attack an "inhuman crime" that followed decades of previous attacks from North Korea, including the sinking of the South Korean warship Cheonan in March.
North Korea has consistently denied responsibility for the sinking of the Cheonan, which killed 46 South Korean sailors.
"It is difficult at this point to expect North Korea to abandon its nuclear weapons or military adventurism," Lee said. "We are now clearly aware that we cannot stay patient and be generous. That will only give rise to bigger provocations."
Lee's address came a day after South Korean and U.S. forces started joint military exercises Sunday, prompting a furious response from North Korea.
The aircraft carrier USS George Washington joined South Korea's forces near the coasts of China and North Korea for the four-day drill, which the North called "no more than an attempt to find a pretext for aggression and ignite a war at any cost," according to the official Korean Central News Agency.
China, North Korea's closest ally, called Sunday for an emergency meeting of the six major powers involved in talks about the Korean peninsula.
Top diplomats from the six nations -- which also include Japan, the United States and Russia -- need to meet soon to "maintain peace and stability on the peninsula and ease the tension" in the region, Beijing's special representative for the region, Wu Dawei, said Sunday.
A top Chinese envoy met with Lee on Sunday, and a high-ranking North Korean official will visit Beijing on Tuesday, China's Xinhua news agency said.
South Korea said Sunday it did not think the time was right for a resumption of the six-party talks, but said it would "bear in mind" the Chinese proposal.
In Washington, meanwhile, a State Department official told CNN that the United States is consulting with its allies, but resumed six-party talks "cannot substitute for action by North Korea to comply with its obligations."
"Clear steps by North Korea are needed to demonstrate a change of behavior," said the official, who was not authorized to speak for attribution.
And U.S. Sen. John McCain, R-Arizona, said on CNN's "State of the Union" Sunday that the flare-up exposed the failure of "continued appeasement" of North Korea by Republican and Democratic administrations.
He said the United States has given North Korea more than $1 billion in aid over the past 15 years with the goal of getting them to the negotiating table.
"It seems the purpose of everything is to get the North Koreans to the table," said McCain, the ranking Republican on the Senate Armed Services Committee. "The North Koreans' only claim to their position on the world stage is their nuclear capability. And they have a terrible, most repressive, oppressive regime in the world. They have hundreds of thousands of people in slave labor camps. And all of that seems to be sacrificed in the altar of, quote, 'negotiations.'"
Meanwhile, the Washington-based ANSWER Coalition called for "an end to the U.S.-South Korean provocations" and announced rallies in New York, Los Angeles and San Francisco, California, on Monday.
"The United States and South Korean governments have been pursuing a policy of deliberate provocation over the past several months," targeting North Korea and China, ANSWER's website states.
"While hypocritically calling for 'calm' in words, Washington is escalating the crisis by its actions," it said, referring to the U.S.-South Korea military exercises and the USS George Washington.
In his Monday speech, South Korea's Lee said efforts to resolve the international standoff through negotiations and humanitarian assistance to the North were met with "nuclear development and the sinking of the Cheonan."
He said the attack on Yeonpyeong Island would have been unlawful even in wartime, adding, "I cannot but be angered at their cruelty."
North Korea said the South provoked the attack because shells from a South Korean millitary drill landed in the North's waters.
The North called reports of civilian casualties part of South Korea's "propaganda campaign" and accused the "enemy" of creating "a human shield by deploying civilians around artillery positions and inside military facilities before the launch of the provocation."
The violence has sparked anger and political turmoil in South Korea.
The country's defense minister, Kim Tae-young, resigned after the exchange of fire.
Veterans of the South Korean military protested over the weekend on the streets of Seoul, stating they were angry that their country's government had not done enough to respond to the North's shelling.
The tense maritime border between the two Koreas has become the major military flashpoint on the Korean peninsula in recent years.
The Yeonpyeong attack was the first direct artillery assault on South Korea since 1953, when an armistice ended fighting. North and South Korea are still technically at war.