The high-level talks included from the North, Kim Jong Un's deputy, Hwang Pyong So, a member of Kim Jong Un's inner circle and political director of his country's army; and Kim Yang Gon, a veteran of negotiations with South Korea since Kim's father, Kim Jong Il, ruled the secretive regime.
Professor David Kang of the University of Southern California's Korean Studies Institute said it was significant that Hwang was there.
"He can speak with the authority of Kim Jong Un. This is as high as you can go. He has the longest history, best idea of what Kim Jong Un and what he's hoping to get out of it," Kang said.
And Kim Yang Gon's attendance may signal that the North really wants serious wide-ranging negotiations.
From South Korea, Kim Kwan-jin, national security adviser to the president; and Unification Minister Hong Yong-pyo attended the meeting.
The meetings at the Peace House at Panmunjom adjourned at 4:15 a.m. (Korea Standard Time) Sunday, according to Min Kyung-wook, spokesman for the South Korean presidential office. Talks will resume at 3 p.m. (KST).
"Both sides widely discussed resolving the recent situation and the future development of the relationship between South and North," the spokesman said.
The meeting comes after 48 hours of threats and counter-threats, which saw a brief exchange of artillery fire Thursday.
Hostilities escalated this month after South Korea resumed propaganda broadcasts against the North, which was blamed for a landmine explosion in the DMZ that wounded two South Korean soldiers. The North resumed its anti-South broadcasts.
But there was a further sign that tensions could ease: In a rare move, North Korean state TV referred to the South as the "Republic of Korea," rather than with the usual propaganda term the "puppet state" in its reporting on the diplomatic talks.
South Korean TV broadcaster YTN re-broadcast the clip of North Korean TV using South Korea's proper name.
The resort area of Imjingak in Paju city, only 7 kilometers (4 miles) from the DMZ, which is usually open to tourists, was closed Saturday, and an information phone line went unanswered when CNN called.
An employee who drove around to ensure the resort was empty of tourists said authorities were evacuating people from this area because there was a danger of bombing.
North Korea: Stop "provocations"
Kim Jong Un's regime on Friday warned its southern neighbor to stop the "provocations" and "psychological warfare" or pay the price.
South Korea's pro-democracy broadcasts, via loud speakers across the border with the North, restarted after the two South Korean soldiers were wounded by landmines.
The South has set up 11 broadcasting points from which it intermittently blasts a combination of democracy content, world news and weather reports into North Korea, the South's Defense Ministry said. It is a tactic the South had stopped using for 10 years.
An official with South Korea's Defense Ministry told CNN that the propaganda loudspeakers along the DMZ are still in operation, and evacuation orders for residents near the zone remain in effect.
Before the talks were announced, North Korean U.N. Ambassador An Myong Hun told reporters: "If South Korea does not respond to our ultimatum ... our military counteraction will be inevitable and that counteraction will be very strong."
As a result of the threats, residents in northern areas of South Korea, such as the district of Yeoncheon, which neighbors the DMZ, were being urged to evacuate Saturday.
Threats almost normal, but this is pointed
North Korea's regime, known for being both thin-skinned
and fond of saber-rattling
, has made threats before, and when it does, South Koreans mostly just go about life as usual.
South Korea is limiting the number of its citizens entering the joint industrial zone with the North, but the complex was still operating on Friday. There are currently 83 South Koreans in Pyongyang attending a youth soccer event.
South Korea's Defense Ministry said Saturday that troops on the border areas were on "regular position."
Pyongyang's vitriol and insults about South Korea and the United States have been the norm for years.
But tensions have mounted since the two South Korean soldiers were seriously wounded by landmines on August 4, including firing between the two sides.
Ambassador An said Friday that "all the (North Korean) front-line large combined units entered into a wartime state ... fully armed to launch any surprise operations and finish their preparations for action."
Pyongyang had demanded the propaganda broadcasts be turned off by 5 p.m. local time (4 a.m. ET) Saturday but, according to local media reports, they continue.
U.S., South Korea exercises resume
South Korean Defense Minister Han Min-koo accused North Korea of pushing the tensions "to the utmost level."
"North Korea's offensive action is a despicable crime that breaks a ceasefire agreement and the nonaggression treaty between North and South," Han said Friday in an address broadcast on South Korean television.
"If North Korea continues on provoking, our military -- as we have already warned -- will respond sternly, and end the evil provocations of North Korea," he said, adding the country is working closely with the United States.
South Korean President Park Geun-hye visited troops at a base south of Seoul, receiving a briefing from military officials, her office said.
One ongoing point of contention is South Korea's joint military exercises with the United States -- a regular training event that An contends aims to "occupy Pyongyang."
Those exercises were suspended Thursday amid the war of words, U.S. Assistant Secretary of Defense David Shear told reporters. But they're now back on.
"We suspended part of the exercise temporarily in order to allow our side to coordinate with the ROK (Republic of Korea) side on the subject of the exchange fire across the DMZ," Shear said. "And the exercise is being conducted now according to plan."
During such exercises in the past, Pyongyang has escalated posturing, propaganda and threats.
North Korea calls broadcasts 'an open act of war'
South Korea and the U.S.-led U.N. Command in Korea concluded that North Korea planted the mines that wounded the South Korean soldiers.
North Korea denied responsibility and refused demands for an apology.
Seoul has since resumed its cross-border propaganda broadcasts, which North Korea called "an open act of war" and spurred it to threaten to blow up the speakers.