Held at the truce village of Panmunjom, a heavily fortified border area in South Korea's North Hwanghae province, the high-level meeting is the first of its kind since December 2015, reports Efe news.
"I came here with hopes that the two Koreas hold talks with a sincere and faithful attitude to give precious results to the Korean people who harbour high expectations for this meeting, as the first new year present," Yonhap News Agency quoted Ri Son-gwon, North Korea's chief delegate, as saying in his inaugural speech.
Ri is the chairman of the Committee for the Peaceful Reunification of the Country, North Korea's state agency handling affairs with the South.
"These talks started after long-frayed inter-Korean ties," said Unification Minister Cho Myoung-gyon, South Korea's chief negotiator, in response.
"Well begun is half done. I hope that (the two sides) could hold the talks with determination and persistence."
Following the hour-long first session of discussion, North Korea confirmed that it will send a delegation including athletes and supporters to the Pyeongchang Games that will take place in February in South Korea, reports the BBC.
"The North side proposed dispatching a high-level delegation, National Olympic Committee delegation, athletes, supporters, art performers, observers, a taekwondo demonstration team and journalists to the Games," Seoul's Vice Unification Minster Chun Hae-Sung told the media.
After a half an hour break, both delegation have started the second round of talks, according to the Unification Ministry.
Tuesday's meeting comes after North Korean leader Kim Jong-un extended a rare rapprochement to Seoul in his New Year's Day message.
He expressed a willingness to send a delegation to the Games and said the country was open for dialogue.
North Korea accepted Seoul's dialogue offer on January 5 after South Korea and the US agreed to postpone their military drills until after the Olympics.
It also reopened a long-disconnected border hotline.
The delegations are also expected to discuss whether the two Koreas would march together under a unified Korean flag at the opening and closing ceremonies.
The last time both countries marched together under the Korean Peninsula flag was more than 10 years ago, at the 2006 Winter Olympics.
As to inter-Korean ties, Seoul will highlight the urgency of easing military tensions and resolving the issue of families separated by the 1950-53 Korean War and for a possible reunion.
The talks came as North Korea is under tough international sanctions over its nuclear and missile provocations.
It conducted its sixth nuclear test and fired three intercontinental ballistic missiles (ICBMs) last year.