The two Koreas agreed on Monday to march together under a unified peninsula flag and form combined teams to compete in the next Asian Games, they said in a joint statement, in the latest sign of a thaw between the old rivals.
Both sides also agreed at a round of talks on their heavily fortified border to hold a series of basketball matches in the North Korean capital of Pyongyang on July 3-6, marking the anniversary of a July 4, 1972, inter-Korean agreement on unification, they said.
The agreement comes amid a range of talks as part of efforts to promote reconciliation, including opening military hotlines and arranging reunions for families of Koreans divided by the 1950-53 Korean War.
"We shared the view that sport initiated inter-Korean rapprochement and cooperation," Jeon Choong-ryul, secretary-general of the Korean Sport and Olympic Committee, who led the talks, told a news conference.
The athletes from the two sides will march together under a unified peninsula flag and the country name "Korea" during the opening and closing ceremony of the Asian Games, as they did in the Winter Olympics in South Korea in February.
The next Asian Games will be held in Indonesia from mid-August to early September.
They agreed to create combined teams for the upcoming games and for other international competitions, such as a shooting competition set to begin in August in the South. They will hold more discussions to work out details.
The South will send a delegation of 100 people, including about 50 players and referees, for the basketball friendly in Pyongyang next month, and another series of matches will be held in Seoul later in the year, Jeon said.
"Today's meeting was to follow up on the achievement we made during the recent Olympics by boosting more regular, various sports exchanges including friendly matches, joint participation in global events and joint training," said Lee Hae-don, an official from the sports ministry who took part in the talks.
Warming ties between North Korea and South Korea come as relations between North Korea and the United States have also improved after tension last year over the North's nuclear and missile programmes.
North Korean leader Kim Jong Un met US President Donald Trump for the first ever summit between the two countries, in Singapore last week.