South and North Korea have joined together to mark 60 years since their liberation from Japanese colonial rule.
The North Korean delegation paid its respects to war dead
The South's President Roh Moo-hyun used a Liberation Day speech to urge unity, and a video link was set up for the first time between the two states.
A 200-strong delegation from the North is in the South on a ground-breaking visit in a move towards reconciliation.
The two nations never signed a peace treaty at the end of hostilities in 1953 and remain technically at war.
Senior members of the North's ruling party are among the visitors to the South.
The delegation attended Mr Roh's Liberation Day address before thousands of people in central Seoul, at which he urged South Koreans to come together.
He said: "It's time for us to put an end to history of dissension, and open an era of national integration.
"This also means laying the grounds to surmount division, and to ring in a reunified era ruled by peace and prosperity."
The North Koreans are expected to meet later in the week with Mr Roh, possibly to deliver a message from their leader, Kim Jong-il.
The delegates also visited Seoul's national cemetery and attended a North v South football match, which the South won 3-0.
The four-day festival is being seen as an opportunity to further improve relations after the rapprochement of recent years.
About 40 families divided by the heavily fortified border were to meet for two hours via video links set up in Red Cross centres on Sunday.
The North Korean visit comes during a pause in the six-nation negotiations over North Korea's nuclear programme.
South Korean officials have said they hope to use the occasion to speak directly to delegates from Pyongyang to establish when the talks on the nuclear issue can resume.
Senior Workers' Party official Kim Ki-Nam was among the 182 North Korean delegates who flew into South Korea's Inchon airport on two specially-chartered planes.
South Korea won a friendly football match against the North
Mr Kim said their visit to the South's national cemetery was to pay tribute in particular to those Koreans who fought Japanese colonial rule.
Korea was occupied by Japan in 1910 and ruled by Tokyo until the end of World War II in 1945.
The country was then divided into American and Soviet-controlled zones along the 38th parallel, a temporary split that became permanent after the inconclusive three-year peninsular war.
The cemetery visit was particularly sensitive because the majority of those buried there were killed in the Korean War.