The warning of Mullen, who is the chairman of the Joint Chiefs of Staff, has come following North Korea's threat that cooperation between its southern neighbor and the United States could trigger a nuclear war.
According to Fox News, Mullen told troops in Baghdad that North Korea is preparing for a combat with South Korea amid preparations for Kim Jong Il to pass power to his son.
On Nov 23, North Korean artillery shells had killed two marines and destroyed several houses and other buildings on the South Korean island of Yeonpyeong.
After the attack, South Korea staged joint military drills with the United States and also pushed ahead with more artillery exercises, despite the North's warning that they would aggravate tension.
In response, North Korea had warned that its army and people were ready for escalated conflicts and on all-out war that would not be confined to the peninsula.
"Should an all-out war break out again on this land, it will not be confined to the boundaries of the peninsula," it added.