Seoul and Pyongyang have agreed on the North's participation in the PyeongChang Winter Olympics and are also set to hold military talks to ease tensions.
The two sides held a high-level meeting at the Panmunjeom border village on Tuesday and adopted a three-point joint media release.
North Korea will send a high-level delegation, a cheering squad, performing artists, observers, journalists and a taekwondo demonstration team in addition to athletes to the PyeongChang Games.
The two sides are set to hold working-level talks to discuss the North's Olympic participation.
In a separate statement, South Korea said the two sides are also close to reaching an agreement on their joint entry at the opening ceremony and holding cultural events together during the Olympic period.
Regarding the easing of military tensions, the two Koreas said they would make joint efforts in this regard and will also hold defense talks.
The two sides also agreed to respect past inter-Korean declarations, resolve all issues through dialogue and negotiation, and facilitate cooperation, exchanges and contacts in various fields.
The Seoul government said the next high-level meeting will be arranged through discussions via the Panmunjeom liaison channel.
The joint press release, however, did not include South Korea's proposal for inter-Korean family reunions around the time of the Lunar New Year holiday next month.
The Tuesday meeting came about following North Korean leader Kim Jong-un's New Year message in which he expressed his intention to hold talks and send a delegation to the Olympics. Seoul then proposed a high-level meeting, which the North accepted.
The talks on Tuesday were led by Unification Minister Cho Myoung-gyon and Ri Son-gwon, chairman of the North's Committee for the Peaceful Reunification of the Fatherland, a state agency handling inter-Korean affairs.
A plenary session began at 10 a.m. and several meetings continued throughout the day until around 8 p.m.
The talks represent an important breakthrough in cross-border relations, which have been cut off due to the North's continued provocations. Minister Cho said the dialogue is significant in terms of restoring South-North relations.
More talks are scheduled to be held on the Olympics as well as military matters, which can all serve to help resolve the nuclear issue and also underline South Korea's leading role in Korean Peninsula matters.