Powell, speaking on a number of television interview shows, said North Korean leader Kim Jong-il must be made to realize Pyongyang's violation of its 1994 agreement to drop its pursuit of nuclear weapons was isolating the regime internationally and harming its prospects for aid and development.
"We can't appease them. I mean ... wrong lessons will be drawn from us stepping forward and saying we are so concerned and afraid of this that we will do whatever it takes, whatever you ask us," Powell said on "Fox News Sunday."
"This is what we saw in the past, they created the same situation in 1994 ... not stop North Korea in ambition so we have to do it right this time."
Bad behavior, he said must not be rewarded, but Washington was prepared to continue working with regional allies to apply pressure in the hope that "common sense will ultimately prevail."
Circumstances, he added, were not at the stage where the United States would need to call for "putting a gun to someone's head" as in the case with Iraq.
North Korea in October admitted to a senior U.S. diplomat -- in Pyongyang to open a dialogue with the North Korean government -- that it had violated its 1994 accord with the United States on producing materials for nuclear weapons and considered the agreement null and void.
Powell said the admission was made in a defiant manner, not the way to improve relations between the decades-old adversaries.
Last week it announced it was tossing out international inspectors monitoring its so-far closed plutonium-producing facility, which it was reopening. It's previously clandestine uranium enrichment facilities, meanwhile, would continue.
The United States believes North Korea already has one or two nuclear bombs, and reopening of the Yongbyon reactor could give it enough plutonium for another device within a year.
"If they start this reactor back up, and if they go beyond what they say they're starting it for -- they say they need the electricity because we cut off the heavy fuel in response to their violation of the agreed framework," he said later on CNN's "Late Edition With Wolf Blitzer."
"But if they go beyond that and start to reprocess the spent fuel that is at the facility, they could have another several nuclear weapons in a matter of, let's say, six months."
"But it is not yet a crisis that requires mobilization or for us to be threatening North Korea. Quite the contrary. We have been saying to North Korea that we have no plans to invade you. We have no hostile intent towards you. You have people who are starving. We are the biggest food provider to the people of North Korea, as part of the world food program," he told CNN.
"So we have no ill intent toward North Korea, but we are deeply concerned about some of the actions they have taken over the years to proliferate weapons of mass destruction throughout the world."
North Korea has demanded a formal non-aggression pact with the United States. It is also believed it wants greater economic aid.
As part of the 1994 agreement, North Korea has been receiving hundreds of thousands of tons of fuel aid, as well as help in building two modern reactors from which it would be difficult to produce fissile material to make a weapon.
With widespread hunger, the country has also been receiving international food aid.
"What he wants is for us to believe we are in a state of panic and we have to give him whatever he is demanding and appease bad behavior," Powell told CBS's "Face the Nation." "That's what we are not going to do."
A senior diplomat would be heading to Asia within the first two weeks of January to consult further with Tokyo and Seoul on how to proceed, Powell said.
The situation, however, was not a crisis, he stressed.