McMaster said on ABC's "This Week" that the United States is considering "a range of options" but would prefer to "avoid the worst."
McMaster said the launch "fits a pattern of provocative and destabilizing and threatening behavior" on North Korea's part.
He said that the U.S. is working to "undertake all actions we can, short of a military option, to try to resolve this peacefully."
"The President has made clear that he will not accept the United States and its allies and partners in the region being under threat from this hostile regime with nuclear weapons," McMaster said. "This is a situation that just can't continue."
Trump's administration on Friday announced a strategy based on "maximum pressure and engagement" in response to North Korea's actions.