Top officials from the two Koreas are meeting in Seoul for three days of talks on improving economic ties.
The meeting is one of several since a landmark leaders' summit
North Korean Deputy Premier Jon Sung-hun will discuss development of joint industrial and ship-building projects with counterpart Kwon O-kyu.
The talks follow a summit in October between leaders of the two nations and come amid a general thawing of ties.
Meanwhile US nuclear negotiator Christopher Hill is paying a rare visit to the North Korean capital, Pyongyang.
On Monday he visited the country's Yongbyon nuclear complex to observe ongoing work to disable the facility.
The disabling is part of an international deal agreed in February under which North Korea ends its nuclear programme in return for economic aid and diplomatic concessions.
Mr Hill is due to hold talks with Pyongyang's chief nuclear negotiator, Kim Kye-gwan, later in the day.
The two Koreas did not sign a peace deal at the end of the Korean War and remain technically at war.
But in October top leaders of the two nations held a landmark summit - only the second ever - and signed an accord calling for greater peace and economic partnership.
In recent weeks senior officials have been working to implement the proposals in several high-level meetings.
Items on the agenda for this set of talks include further development of the joint Kaesong industrial zone, a joint ship-building facility in the North and cooperation on infrastructure projects, said South Korean official Kim Jung-tae.
"We'll also have a broad discussion on how to create environments to boost cross-border economic projects," he said.
Last week defence chiefs of the two Koreas held rare talks in Pyongyang and later this month a cargo rail service, the first for over 50 years, is due to begin regular cross-border services.