North and South Korea will form their first joint Olympic team and march together at the opening ceremony, Seoul says.
The two countries will field a joint women’s ice hockey team at the Winter Olympics in PyeongChang, South Korea, next month.
They will also march under a unified flag, according to a statement from Seoul’s Unification Ministry.
North Korea will send a 550-member delegation to the games, which includes 230 cheerleaders, 140 artists and 30 taekwondo players for a demonstration.
They will begin arriving in South Korea on 25 January.
Officials have also agreed that a 140-piece orchestra from North Korea will perform in the South during the Olympics.
North and South Korea are still technically at war with each other, as the 1950-53 conflict between the two states ended in a truce, not peace.
Representatives from both countries have been talking with each other since last week, after more than two years of silence.
The move also follows heightened tensions over the North’s missile tests, nuclear weapons programme and its regular threats to destroy its neighbours.
Despite a slight thawing of tensions, Japan has warned that the world should not be naive about the North’s “charm offensive”.
“It is not the time to ease pressure or to reward North Korea,” foreign minister Taro Kono said.
“The fact that North Korea is engaging in dialogue could be interpreted as proof that the sanctions are working.”
Reaction to news of a joint Olympic team has been mixed in North Korea, with some athletes not happy about competing with their neighbours.
More than 100 petitions have been sent to South Korea’s presidential Blue House website opposing a joint Olympics team.
The most popular has more than 11,000 signatures, with one person writing: “This isn’t the same as gluing a broken plate together”.
North Korea’s Rodong Sinmun newspaper said the relationship between the North and the South was “going towards detente”.
But it criticised Japan’s leader for refusing to ease the pressure on Pyongyang without the latter taking steps towards de-nuclearisation.
It said: “The detente on the Korean peninsula is unfavourable for the (Japanese Prime Minister Shinzo) Abe group whose ultimate goal is to convert Japan into a war state.
“That is why they persist in their policy to stifle the DPRK (North Korea).”