The liaison office's opening came before South Korean President Moon Jae-in and North Korean leader Kim Jong Un meet next week for the third time this year to discuss denuclearization of the peninsula and other issues.
The agenda for the meeting, set for 10 a.m. (4 p.m.in Prague), will be "to discuss the implementation and enforcement of United Nations sanctions on North Korea". -South Korea summit in May.
Moon is to fly to Pyongyang next Tuesday for a three-day trip.
There Kim backed denuclearisation of the "Korean peninsula", but no details were agreed and Washington and Pyongyang have sparred since over what that means and how it will be achieved. But nuclear diplomacy was later stalemated as USA officials demanded Kim take more significant steps before receiving concessions like a joint declaration to end the Korean War.
It will be the third summit this year between Moon and North Korean leader Kim Jong Un.
Background: The office was a key pledge at the summit between Seoul and Pyongyang in April.
The opening of the liaison office is a sign that even if talks between the North and the U.S. are not moving forward, the two Koreas seem determined to develop closer ties, says BBC Seoul correspondent Laura Bicker.
At his meetings with Moon and Trump, Kim signed statements pledging the complete denuclearization of the peninsula.
The differences prompted Trump to cancel Secretary of State Mike Pompeo's planned visit to North Korea last month.
Thursday, Washington imposed sanctions on two information technology companies based in China and Russian Federation for supporting Pyongyang's nuclear and missile programs.
Ri Son Gwon, chairman of North Koreas's Committee for Peaceful Reunification, said during the ceremony that the office would help the Koreas have "candid conversations" and further build their ties, according to South Korean media pool reports from the site.
North Korea, meanwhile, did not display intercontinental ballistic missiles that can target the United States at Sunday's military parade, signaling Kim's desire to refrain from provoking Trump to resume talks with Washington.
The two sides were also expected to discuss a series of issues, such as withdrawing DMZ guard posts on a trial basis, carrying out a joint project to excavate Korean War remains in the buffer zone and disarming the Joint Security Area in Panmunjom.
"The deadlock resulted from mutual demands that the other side take action first, and I think we can surely find a point of contact", Moon Jae-in told a meeting on Thursday with advisers on the summit.
Haley said earlier this year that successively tough Security Council sanctions resolutions adopted unanimously had cut off all North Korean exports, 90 percent of its trade, and disbanded its pool of workers send overseas to earn hard currency. "The process can't have anything to do with a plan to denuclearize unilaterally".
Pyongyang had long disputed the sea line on the grounds that it was drawn unilaterally by the then-U.S. -led U.N. Command after the end of the 1950-53 Korean War. -South Korea alliance or lead to a withdrawal of US troops.
During talks with Lee, Biegun said the two sides need to do everything they can to make the most of this moment of opportunity created by the leaders of the two Koreas and the U.S. -South Korea joint military exercises must continue.