Returning the remains of the US soldiers who perished during the 1950-53 conflict was part of a deal signed by the North's leader Kim Jong Un and US President Donald Trump during their landmark summit last month.
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The latest talks began at the border truce village of Panmunjom on Sunday, the South's Yonhap news agency said, citing a Seoul official.
"We understand that the North-US talks on repatriation of the remains are underway," it quoted an unnamed official as saying.
TV news footage showed vehicles with US army plates and believed to be carrying American officials heading to the heavily fortified border.
US Secretary of State Mike Pompeo, who visited Pyongyang earlier this month to flesh out details of the denuclearisation deal signed by Kim and Trump, said earlier that the meeting would take place on or around last Thursday.
The North did not show up at the border on Thursday but contacted the US on the same day to offer to meet on Sunday, US State Department spokesperson Heather Nauert said last week, adding "We will be ready."
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Dozens of wooden coffins to carry the American remains have reportedly been brought to the southern side of the border in recent weeks.
The White House has hailed the summit between Kim and Trump in Singapore as a major breakthrough toward disarming the isolated, nuclear-armed North in exchange for easing of sanctions and other help with economic development.
Pompeo, who met with Kim's key aide during his latest trip to Pyongyang, insisted the talks were making progress but as soon as he left, the North's foreign ministry berated him over his "unilateral and gangster-like" demands.
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Trump on Thursday signaled optimism, unveiling a letter from Kim in which the young leader hailed the "start of a meaningful journey" and tweeting "Great progress being made!"
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