Medvedev and North Korean leader Kim Jong Il met in Sosnovy Bor, a garrison town in the Russian Republic of Buryatia in South Siberia, RIA Novosti reported.
Natalia Timakova, a spokeswoman for Medvedev, said Kim was prepared to resume nuclear talks without any preconditions. The talks were suspended two years ago, and Russia and China have said they are prepared to return to the table immediately while the United States, Japan and South Korea want North Korea to show good faith first.
Kim also agreed to allow Gazprom, the state-owned Russian natural gas company, to build a pipeline to South Korea through his country. The two leaders also discussed North Korea's outstanding debt to the former Soviet Union and possible food aid from Russia.
RIA Novosti said some reports estimate the project could bring about $100 million a year in much-needed hard currency to Pyongyang.
"We've ordered our government bodies to establish a special commission … to outline the details of bilateral cooperation on gas transit through the territory of North Korea and the joining of South Korea to the project," Medvedev was quoted as saying.
The Russian leader said technical work on the pipeline would start soon.
South Korea is one of the largest buyers of natural gas, with imports of liquefied natural gas from Russia alone totaling 1.5 million tons last year, South Korea's Yonhap news agency reported. The report said North Korea reacted favorably to the project during the visit of Gazprom officials.