The prime minister confirmed the intermediate range ballistic missile flew over the north of the country and landed about 1000km to the east of Japan in the Pacific Ocean.
"We condemn this latest missile test in the strongest terms," he told FiveAA radio on Tuesday.
"The North Korean regime continues recklessly to threaten the peace and stability of the region and indeed of the world."
Mr Turnbull again called on all nations to impose the harshest sanctions on Pyongyang, singling out China as the country with the most economic leverage.
"In particular we welcome China’s clear intent to implement the latest sanctions which will impose a heavy economic price on North Korea for its dangerous conduct," he said later in a statement.
"China has unique economic leverage over North Korea and with that greatest leverage comes the greatest responsibility and we urge Beijing to use it, to bring this North Korean regime to its senses."
Foreign Minister Julie Bishop decried the "provocative, dangerous, destabilising and threatening act" that directly breached a United Nations Security Council resolution.
However, those experienced in reading the signals from North Korea believed there were indications the rogue nation was listening to the international condemnation, she said.
This included not following up on its threats to the US territory of Guam.
"Their response is sometimes hard to assess and this current missile test is obviously another message," Ms Bishop told reporters in Canberra.
Hokkaido officials react at the local government building in Sapporo on Aug 29 2017 after a North Korean ballistic missile passed over Japan. Source: AAP
"We have seen this pattern of behaviour by the North Korean regimes over a number of decades. They ramp up the provocative behaviour and it gets to a point where they then sit down and negotiate.
"I believe that this is an indication that North Korea will be prepared to negotiate."
Sanctions taking effect
Sanctions on North Korea, especially those imposed by China on trade of seafood, coal and iron and lead ore, are only just coming into effect and Ms Bishop expect they would soon start to hurt.
Cabinet and its national security committee will consider the issue later on Tuesday.
"This is a serious escalation of the provocative behaviour by North Korea. It is the first time since 1998 that they have actually fired a missile over Japanese territory,' she said earlier on Sky News.
"Presumably the Japanese made a calculation about the likely destination of this missile and the fact that it broke up before it landed in the Pacific might have factored into their calculations.
"But make no mistake this is a serious escalation of North Korea's behaviour."
"I believe that the nations affected, including South Korea, Japan, the United States, China and other members of the security council will discuss ways to bring North Korea to the negotiating table," the foreign minister said.
'Sanctions will have an impact'
She also said the new sanctions from the UN Security Council taking place on September 1 will have an impact.
"The sanctions will start to have a real impact. This is to ban all exports of North Korean coal, lead, iron ore and seafood," she said.
"Also to refuse any new work permits for North Korean workers, this will start to have a significant economic impact on North Korea and that's when the opportunity will arise to bring North Korea to the negotiating table."
North Korea's missile launch over Japan has been denounced as highly provocative by federal Labor.
Opposition foreign affairs spokeswoman Penny Wong labelled the launch a highly provocative, unlawful action.
Japanese Prime Minister Shinzo Abe said on Tuesday he would do all in his power to protect the Japanese public after North Korea fired a missile that passed over the country's territory.
"We will make utmost efforts to firmly protect the lives of the people," Abe told reporters in brief remarks as he entered his office for emergency meetings on the missile firing.
