The 10-year-old facility, the only economic link between North and South Korea, was shuttered in April because of tensions between the two countries.
A source in the South Korean Unification Ministry, in charge of bilateral affairs, said both sides "reached an understanding" on the complex, the Yonhap News Agency reported Tuesday.
Under the agreement, South Korean companies be allowed to restart operations after a trial run on Monday.
Chinese Foreign Ministry spokesman Hong Lei said Beijing welcomed the decision as a sign of positive development in Korean affairs, the official Xinhua News Agency reported Wednesday.
Operations at Kaesong halted when North Korea unilaterally pulled its 53,000 workers from the complex, citing political and military provocations from South Korea this year.
Tensions on the Korean Peninsula escalated when North Korea conducted an underground nuclear test in February, its third.
The China Institute of International Studies, tied closely to the Foreign Ministry, said it would hold a seminar Sept. 18 to review six-party talks on North Korea's nuclear program. Multilateral talks between both Koreas, China, the United States, Russia and Japan were suspended in 2009.