Media reports said the Coast Guard had fired at a suspicious boat in the river but multiple sources - including the FBI, Coast Guard and DC Metro police - confirmed to CBS News that no shots were fired.
The Coast Guard said it was reviewing how the exercise led to TV news reports "based on overheard radio calls made over a training frequency" normally used only by the Coast Guard.
The Coast Guard said such exercises go on every day in and around U.S. ports, and the Secret Service is not normally notified.
Erroneous live cable news reports on CNN and Fox had said that the Coast Guard was firing shots on the river. CNN reported the Coast Guard had fired 10 rounds at a suspicious boat, and showed vessels circling in the water - near the bridge President Barack Obama's motorcade crossed on the way to a memorial at the Pentagon earlier Friday morning.
The president was not in the area when the training exercise took place, the Coast Guard said.
A group for military families expressed outrage that the training exercise was held near the Pentagon at the same time families of those who died during the Sept. 11 attacks had gathered there for a memorial.
"September 11th is a day to remember the loss of 2,973 innocent victims in New York, Pennsylvania and the Pentagon; not a day to create an unnecessary panic near a terrorist's target," Military Families United said in a statement.
Departures from Reagan National Airport were halted as a precaution at 10:08 a.m., then resumed at 10:30 a.m., Federal Aviation Administration spokeswoman Diane Spitaliere said. The airport borders the Potomac.
A law enforcement official, speaking on condition of anonymity, said federal agents scrambled to the river scene after the initial media reports, because the local FBI office had not been told ahead of time about the Coast Guard exercise. The official spoke on condition of anonymity because the official was not authorized to discuss the incident.
The confusion was reminiscent of an event earlier this year in New York, when a presidential plane was flown low over the city for a photo shoot and some people feared the city was under attack.
Coast Guard spokesman John Edwards said references to shots fired on the river Friday were picked up in radio chatter heard by CNN. As part of its exercise, the Coast Guard aired simulated instructions to participants to fire 10 rounds, Edwards said.
But there were no shots actually fired and no suspicious boats, Edwards said.
Mr. Obama had traveled to the Pentagon to lay a wreath in a ceremony commemorating the eighth anniversary of the terrorist attacks.
In late April, a huge presidential passenger jet and two F-16 fighter planes whizzed past the Statue of Liberty and the lower Manhattan financial district as part of a photo shoot, sending panicked office workers streaming into the streets and evoking memories of 9/11.
After that incident, Mr. Obama saidand promised it would not happen again. The director of the White House's military office resigned after the incident.
The Coast Guard is part of the Homeland Security Department, which was created in response to the 9/11 attacks. The massive reorganization was designed to promote sharing of information within the department and among other law enforcement agencies.