South Korean President Moon Jae In and high-ranking North Korean officials, including leader Kim Jong Un's sister, held rare formal talks on Saturday, a day after the two nation's athletes marched under a unified flag at the Olympics.
All eyes are on whether the two Koreas will agree to pave the way for a summit between Moon and Kim Jong Un, a move that some countries believe could accelerate a thaw in inter-Korea ties but also ease pressure on Pyongyang without its denuclearization.
It is the first time in over a decade for a South Korean president to hold formal talks with high-ranking North Korean officials. The two nations remain technically at war after the 1950-53 Korean War ended in a cease-fire.
The two Koreas held two summits in 2000 and 2007, between the late North Korean leader Kim Jong Il, father of Kim Jong Un, and then South Korean presidents Kim Dae Jung and Roh Moo Hyun.
As part of the delegation to the Pyeongchang Olympics, the current leader's younger sister, Kim Yo Jong, regarded as one of her brother's closest aides, arrived in South Korea by plane Friday with other senior officials such as the North's ceremonial leader Kim Yong Nam.
She is the first immediate family member of North Korea's founder Kim Il Sung to ever set foot in the South.
Speculation is rife that during Saturday's luncheon meeting between Moon and the North Korean delegation led by Kim Yong Nam, the president could be invited to Pyongyang sometime this year.
Moon, who has pledged to improve relations with North Korea in a peaceful manner, may also receive a personal message from Kim Jong Un, possibly including a proposal for a summit.
In his New Year's address, Kim Jong Un extended an olive branch, vowing to prepare for his nation's participation in the Pyeongchang Winter Olympics.
Kim Jong Un's decision to dispatch his sister to the games indicated he is keen to mend ties with Seoul, while testing the unity among South Korea, the United States and Japan over sanctions imposed on the North over its missile and nuclear programs.
At the opening ceremony of the Olympics on Friday night, Moon and Kim Yo Jong shook hands in what appeared to be a friendly manner.
But the United States and Japan have warned against North Korea's "smile diplomacy," through which Pyongyang is apparently trying to weaken international economic sanctions against it by getting close to South Korea.
Washington and Tokyo are concerned that Seoul's conciliatory stance toward Pyongyang could endanger trilateral cooperation on bolstering pressure against North Korea, and could give the country more time to develop nuclear weapons.
The United States and Japan have agreed to continue to put maximum pressure on North Korea in cooperation with the South until Pyongyang takes concrete steps toward denuclearization.
North Korea, meanwhile, has shown no signs of abandoning its nuclear and missile programs, maintaining its hostile posture toward Washington.
On Thursday, Pyongyang staged a military parade, where it displayed what appeared to be intercontinental ballistic missiles capable of delivering a nuclear warhead anywhere in the United States, in a thinly veiled threat to Washington.