The two Koreas agreed to send three delegates each to Panmunjom, a traditional point of contact on their border, for talks aimed at paving the way for higher-level negotiations, Seoul's Unification Ministry said.
Pyongyang conveyed its decision to the South through a hotline between the two sides that was reopened on Friday, the ministry said. The hotline was severed in March as military tensions soared on the divided peninsula.
The two nations unexpectedly reached a snap agreement Thursday on opening a dialogue, with South Korea responding to a North initiative by offering a ministerial-level meeting in Seoul on June 12.
A spokesman for Pyongyang's Committee for the Peaceful Reunification of Korea then suggested initial lower-level talks Sunday in the Kaesong joint industrial zone.
The South's Unification Ministry -- using the newly reopened hotline -- agreed but said Panmunjom would be a more appropriate venue.
The proposed agenda for the North-South talks involves the re-opening of Kaesong, the resumption of tours to the North's Mount Kumgang resort and renewed cross-border family reunions.
The Kaesong complex, established in 2004 as a symbol of inter-Korean cooperation, was the most high-profile casualty of the recent tensions.
Operations ground to a halt after the North pulled all its 53,000 workers out in early April. The South withdrew its managers and officials soon afterwards.
As the two Koreas gingerly groped ways for resuming dialogue, both sides stopped short of mentioning the thorniest issue of the North's nuclear programmes as one of the
But the South is widely expected to touch on the issue when the ministerial talks occur.
The North's decision to hold talks in Panmunjom came just after a US-China summit began in California, at which the North's nuclear programme will be high on the agenda.
Analysts said North Korea's surprise shift signalled a desire to initiate a wider dialogue in the future involving the United States.
But US State Department spokeswoman Jennifer Psaki made it clear that North Korea would have to show some commitment towards abandoning its nuclear weapons programme before the US got involved.
Pyongyang has repeatedly insisted that its nuclear deterrent is not up for negotiation.
The last working-level talks between North and South Korea were held in February 2011, and there have been no inter-Korean talks at the ministerial level since 2007.
The North's nuclear test in February resulted in tightened UN sanctions and triggered the cycle of escalating tensions that saw Pyongyang threaten pre-emptive nuclear strikes against the United States and South Korea.
China, the North's sole major ally and economic benefactor, has been under pressure from the United States to restrain its neighbour, and both Washington and Beijing welcomed the tentative talks agreement.