South Korea is preparing to host hundreds of North Koreans during the Olympics, including officials, athletes, artists, journalists and a 230-member cheering group.
The remarks come amid a relative ease in the months-long tensions over North Korea's weapons and nuclear activities.
Any North Korean attack would be "severely rebuffed", Mattis added.
"I think it is skeptical that North Korea would actually use its nuclear weapon against the USA and South Korea", the minister said, responding to questions following his keynote speech at the Fullerton Forum hosted by the International Institute for Strategic Studies.
The talks are seen as an important step as it is the first time the North and South have been in dialogue in around two years. The South Korean Ministry of National Defense said the two ministers "stressed that any effort to drive a wedge in the South Korea-US alliance would not succeed, and agreed to continue cooperative closely so that North Korea changes its attitude and comes to the negotiating table to discuss denuclearization".
Washington agreed to delay them until after the Olympics, which will be held on February 9-25 in the South Korean alpine town of Pyeongchang.
The Pentagon rejected that idea, although it didn't give a new start date for the exercises. The 12 North Korean players will join 11 from South Korea to form the team. "The worldwide pressure campaign [against North Korea] must continue", Mattis declared, adding that "our aim remains a complete and verifiable and irreversible de-nuclearization (CVID) of the Korean Peninsula".
North Korea has frequently responded to the exercises - and similar drills held by the allies in the fall - with missile tests and a stream of bellicose rhetoric. "There's no suspension contemplated". "Diplomacy should repose reason on Kim's reckless rhetoric and risky provocations", he added.
A joint Korean women's hockey team have practised together for the first team on Sunday, after North and South Korea chose to join forces for the first time ever at an Olympic competition.
The US, however, has imposed new sanctions on North Korea and Chinese firms and individuals that support Pyongyang's nuclear weapons program. It test-fired three intercontinental ballistic missiles and conducted its sixth and most powerful nuclear test a year ago.
The goal remains the complete, verifiable and irreversible denuclearization of the Korean Peninsula, Mattis told reporters at U.S. Pacific Command's headquarters at Joint Base Pearl Harbor-Hickam, with South Korea Minister of Defense Song Young-moo.
Some 28,500 US servicemembers are based in South Korea, which remains technically at war with the North after their 1950-53 conflict ended in an armistice instead of a peace treaty.