The reunion, comprising a series of meetings over a week, is being held at a Mount Kumgang resort, at the border.
Thousands of families have been apart with little or no contact since the Korean War ended in 1953.
Korean family reunions have been held sporadically since 1988 and depend on the state of relations between South Korea and North Korea.
The last reunion was held in February 2014.
This year’s family reunion comes after an agreement in August that de-escalated tensions sparked by a border explosion that injured South Korean soldiers.
The meetings, organized by the Red Cross, are hugely popular with tens of thousands signing up, but few on each side get chosen and they tend to be elderly.
In South Korea participants are picked at random by a computer which takes into account their age and family background.
They also have to sit for interviews and take medical examinations to determine if they are fit to travel.
The first group of about 400 South Koreans, comprising of chosen participants and their accompanying family members, are taking part in the first round of meetings running from October 20 to October 21, reported Yonhap news agency.
Another 250 will attend the second round of meetings from October 24 to October 26. Each round comprises of six two-hour sessions.
Many of those attending from South Korea are bringing gifts for their North Korean relatives such as clothes, food, toothpaste, and cash.
South Korea and North Korea remain technically at war as the Korean War only ended in an armistice.
The family reunions began in 2000 and have since been carried out sporadically.
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