The talks were held in Panmunjom, the truce village in the Demilitarised Zone that splits the peninsula, with the North's group walking over the Military Demarcation Line to the Peace House venue on the southern side.
North Korea said it was willing to send athletes and a high-level delegation to the forthcoming Winter Olympics in the South on Tuesday as the rivals held their first official talks in more than two years after high tensions over Pyongyang's nuclear weapons programme.
Seoul urged that reunions of families divided by the 1950-53 Korean War — one of the most emotive legacies of the conflict — be held at the same time as the Games.
The talks were held in Panmunjom, the truce village in the Demilitarised Zone that splits the peninsula, with the North's group walking over the Military Demarcation Line to the Peace House venue on the southern side — just yards from where a defector ran across in a hail of bullets two months ago.
"The North side proposed dispatching a high-level delegation, a National Olympic Committee delegation, athletes, supporters, art performers, observers, a taekwondo demonstration team and journalists" to the Games, the South's vice unification minister Chun Hae-Sung told journalists.
Looking businesslike, the South's Unification minister Cho Myoung-Gyon and the North's chief delegate Ri Son-Gwon shook hands at the entrance to the building, and again across the table.
In accordance with standard practice in the North, Ri wore a badge on his left lapel bearing an image of the country's founding father Kim Il-Sung and his son and successor Kim Jong-Il.
Cho also wore a lapel badge, depicting the South Korean flag.
In addition to the resumption of family reunions, Seoul suggested the two sides march together at the opening ceremony. It also called for Red Cross talks and military discussions to prevent "accidental clashes".
"Let's present the people with a precious new year's gift," said the North's Ri. "There is a saying that a journey taken by two lasts longer than the one travelled alone."
The atmosphere was friendlier than at past meetings, and Cho told Ri that Seoul believed "guests from the North are going to join many others from all around the world" at the Olympics.
"The people have a strong desire to see the North and South move toward peace and reconciliation," he added.
It was a radically different tone from the rhetoric of recent months, which have seen the North's leader Kim Jong-Un and US President Donald Trump trade personal insults and threats of war.
Pyongyang has defied international pressure in recent months and launched missiles it says are capable of reaching the US mainland and carried out its sixth and most powerful nuclear test to date.