The Trump administration has made the issue one of its top priorities.
Despite international condemnation, North Korea has increased its missile tests, with the aim of developing an intercontinental nuclear-armed rocket.
The US Defense Intelligence Agency warned last month that North Korea was on an "inevitable" path to achieving this.
US officials speaking anonymously to several news agencies said the latest engine test, on Thursday, could be one stage of an intercontinental ballistic missile (ICBM) engine that would be able to reach the US.
Due to the secretive nature of all of North Korea's military activity, it is hard for experts to assess how close the country is to building a reliable ICBM.
North Korea's missiles - what do we know?
North Korean missiles can already reach South Korea or Japan, both countries have a US military presence.
A missile to reach the US mainland is in development but it's not clear what stage the project is at.
North Korea has conducted several successful nuclear tests.
But it's thought they have not yet managed to build a nuclear warhead small enough to fit on a missile.
US Secretary of State Rex Tillerson on Wednesday urged China to use more diplomatic pressure on Pyongyang "if they want to prevent further escalation in the region".
China is seen as North Korea's main ally and the US hopes Beijing can have greater influence on the totalitarian state to stop both its missile tests and nuclear programme.
US President Donald Trump has said he would like to solve the North Korea crisis diplomatically, but has previously warned that a "major, major conflict" is possible.
Tensions spiked once again last week when US student Otto Warmbier who was serving a hard labour sentence in North Korea for stealing a propaganda sign, died shortly after returning home in a coma.
The US has also ramped up its military presence in the region, conducting drills with Japan as well as South Korea, and is installing a controversial missile defence system in South Korea, known as Terminal High-Altitude Area Defense system (Thaad).
But South Korea recently said it was suspending the further deployment of the system until an environmental assessment was completed.