Azerbaijan's Defense Minister Safar Abiyev told Russia's state-run news agency RIA Novosti the three-day drills would feature ground forces and "the use of modern machinery and weapons."
Skirmishes broke out between Azeri and Armenian forces in June over Nagorno-Karabakh. Both sides have gone to war over the territory, which Azerbaijan claims as its own.
Azeri Deputy Prime Minister Ali Gasanov had suggested "provocation" from the Armenians was timed to coincide with a visit to the region from U.S. Secretary of State Hillary Clinton last month.
Clinton, during talks with Azeri officials in Baku, said conflict wouldn't solve an issue simmering since at least the 1990s.
Armenian President Serzh Sargsyan, for his part, had said his country wasn't interested in further escalation of the conflict. Several Armenian and Azeri troops were killed during the skirmishes.
Baku said the military drills would end Friday.