Kim Jong-un became the first North Korean leader on Friday to set foot in South Korea by crossing the military line, ahead of the historical inter-Korean talks.
The formal talks between Kim and South Korean President Moon Jae-in began here in the Panmunjom border village in the third-ever inter-Korean summit, media reported.
In a moment rich with symbolism and pomp, Moon and Kim shook hands at the border, as both hoped for "frank" discussion that will cover nuclear weapons and a possible peace treaty.
Much of what they will talk about is likely to have been agreed in advance, but many analysts remain sceptical about the North's sincerity in offering to give up nuclear weapons, the BBC said.
Kim was accorded a ceremonial welcome before launching the talks on peace and prosperity of the Korean Peninsula, Xinhua news agency reported.
The talks are being held at a conference room on the second floor of the Peace House, a South Korean building in Panmunjom village that divides the two Koreas.
Standing on the two sides of the military demarcation line (MDL), marked only by a low concrete slab, Moon and Kim shook hands with beaming smiles on their faces for their first meeting. The MDL came up post the 1950-53 Korean War that ended in an armistice.
After walking across the MDL into the South Korean side, Kim invited Moon to briefly cross the border into the northern side. It was an apparently unscripted moment during a highly choreographed sequence of events, the BBC report added.
They returned to the southern side of Panmunjom holding hands, marking a historic moment in more than a decade.
The previous two inter-Korean summits took place in Pyongyang in 2000 and 2007, respectively.
Kim in his introductory remarks for the morning talks told Moon that it was time to "write a new history" and also for peace and prosperity.
Before starting the dialogue, Kim wrote in the guestbook that "a new history begins now" and "an age of peace, at the starting point of history", said the inter-Korean summit joint press corps.
The North Korean leader also told Moon that he hoped to create a good result by frankly discussing issues of mutual interest and not making proposals, which the two sides would not be able to enforce.
Moon, in his turn suggested that they "engage in frank talks and reach a bold agreement" as a gift to the whole Korean people, who want peace.
The South Korean President said Panmunjom has changed into a symbol of peace from a symbol of division at the moment Kim walked over the MDL.