NATO Secretary-General Javier Solana warned Yugoslav President Slobodan Milosevic he faced his last chance to avert military action.
Lieutenant-General Michael Short, commander of allied air forces, southern Europe, said 84 aircraft are participating in exercise "Determined Falcon" and 13 of NATO's 16 states are involved.
Short said he expected Yugoslav air defenses to follow the planes "very closely."
CBS News Correspondent Mark Phillips reports the U.S. F-16s took off from their base in Aviano, along with planes from Spain and Portugal. No attempt was due to enter or get near Yugoslavia air space.
The exercises are taking place under peacetime rules of engagement. "That means air crews have the inherent right to self-defense," he added. "It is important to stress that we will do nothing to provoke a response."
The air-power exercise shows not only alliance unity on halting the Kosovo crisis, but also its ability to act with "significant lethal capability" should that be necessary, U.S. Defense Secretary William Cohen said Monday in Warsaw.
Cohen spoke briefly with reporters after talks with Poland's Prime Minister Jerzy Buzek, to be followed later in the day with additional meetings with Polish Minister of Defense Janusz Onyszkiewicz.
Poland is one of three invitees due to join NATO next year.
Buzek said the two men had "good discussions" on matters of European security, and the simmering situation in Kosovo.
Cohen said NATO's exercise "will demonstrate...that NATO is united in its commitment to seek a cease-fire and a cessation of hostilities, and demonstrate its capacity to rapidly mobilize some very significant lethal capability."
Phillips reports that Yugoslavia journalists were flown to Aviano Monday to show them the size of the force that could be mustered against their country, should the need arise.
The planes are flying over the Adriatic Sea into the airspace of Albania and the former Yugoslav Republic of Macedonia, returning to Italy in a huge clockwise swirl.
Fighting continued in Kosovo over the weekend, and Milosevic was expected in Moscow later on Monday for crucial talks with Russian President Boris Yeltsin.
Washington and its European allies are piling pressure on Milosevic to stop the crackdown on ethnic Albanians in Serbia's southern province and prevent the conflict from sweeping through the southern Balkans.
"We want to show that we are prepared to ac, if necessary, in order to back up the international community to find a solution to this terrible problem of Kosovo," NATO Secretary-General Solana said.
"We are facing probably the last opportunity that President Slobodan Milosevic has to abide by international community recommendations in order to find a peaceful solution to the conflict," he told BBC radio.
Solana made clear NATO wanted to get U.N. Security Council approval for any military action.
But Security Council member Russia was quick to express displeasure over NATO's show of force. Reports of Moscow's unhappiness emerged as Milosevic headed for Moscow.
Defense Minister Igor Sergeyev said NATO had misled him over the air exercises which he described as "unexpected," Interfax news agency reported.
"We discussed the Kosovo problem [during my trip to Brussels]. We all agreed that first of all it was necessary to resolve it with political measures. And as soon as I get back to Moscow, I find out the exercises have begun. This was unexpected for me," Sergeyev said after talks with visiting U.S. General Hugh Shelton.
Russia is uneasy about NATO's increased presence in the southern Balkans. It has maintained close ties with Serbia based on a common Slav and Orthodox heritage.
Earlier on Monday, the Russian Defense Ministry confirmed that it was recalling to Moscow its military representative to NATO, Lieutenant-General Viktor Zavarzin, but declined to say whether this was a protest.
In Sunday's clashes three Kosovo Albanians and two Serbian policemen were killed when guerrillas of the separatist Kosovo Liberation Army (KLA) attacked a military convoy, Serbian sources said.
The Albanian-run Kosovo Information Centre accused Serb security forces of blasting ethnic Albanian villages across western Kosovo in attacks that also killed at least four Albanians Saturday.
Ethnic Albanians account for 90 percent of Kosovo's 1.8 million population and increasingly support the KLA's demands for independence.