Information Minister Pramod Mahajan was quoted as saying that India had informed Pakistan before the launch, as it had agreed to do when the prime ministers of the two countries met in January.
The test comes 11 months after India conducted a series of underground nuclear explosions May 11. That test prompted Pakistan to respond with tests of its own, and raised international fears of a nuclear arms race between the two belligerent nations.
The United States had urged India to refrain from further testing as part of a series of confidence-building measures with rival Pakistan.
The missile, called Agni (which means "fire" in Sanskrit) was last tested five years ago. The earlier version of the Agni had a range of 930 miles, enabling it to strike targets deep inside the territory of India's neighbors, Pakistan and China.
Mahajan said the missile was tested at 10 a.m. local time (12:30 a.m. EDT) from Wheeler Island off the coast of the eastern state of Orissa. "It was a perfect textbook launch," he said.
It also comes at a time of political instability in India, with the government facing the possibility of losing its parliamentary majority after the legislature reconvenes on Thursday. A key coalition partner has threatened to withdraw from the ruling alliance, which could precipitate the government's collapse.
Prime Minister Atal Bihari Vajpayee, who came to power 13 months ago, won a burst of public support for his government amid the immediate euphoria of the May nuclear test.
The United States has pressed India and Pakistan to sign an international test ban treaty, back away from developing their delivery systems, and resolve territorial and other disputes.
India and Pakistan have fought three wars since the two nations were carved from a British colony in 1947. Skirmishes occur almost daily across the disputed Himalayan territory of Kashmir, which both countries claim in its entirety.