Thousands of citizens took to the streets and waved flowers, the North Korean national and Korean peninsula flags, as Moon and Kim Jong Un stood in an open car.
Video footage showed the two leaders arriving at the North's state residence, Baekhwawon State Guesthouse, ahead of a luncheon. The two leaders had their first round of summit talks at the headquarters of the North's ruling Worker's Party on Tuesday.
About 50 in the South Korean delegation, which consists of business leaders, politicians and major cultural, sports and religious figures, arrived in Pyongyang with Moon. Heads of South Korea's major conglomerates -- Samsung, SK, LG and Hyundai Motors -- met North Korean Deputy Prime Minister Ri Ryong-nam, who's in charge of economic affairs.
South Korea's presidential office said Moon and Kim will discuss inter-Korean relations, easing military tensions and ways to move forward the process of denuclearization.
Moon seeks to bridge gaps between the United States and North Korea in their steps toward complete denuclearization, as agreed in their Singapore summit in June.
U.S. President Donald Trump said he wants Moon to work as a "chief negotiator" in moving the nuclear talks forward.
Experts said the summit could bring some solutions to the current nuclear stalemate and the process for denuclearization should accompany fundamental changes in U.S.-North Korean relations.
"There has to be a dramatic agreement to bridge the gap, such as the declaration of the end of the war by the U.S., and the North making some substantial steps in their nuclear disarmament," Tim Shorrock, a commentator on U.S. foreign policy, told UPI.
Shorrock said the United States has to give a security guarantee to the North to encourage a full report of nuclear weapons.
Both sides have to be ready to make compromises to move the process of denuclearization forward, said John Delury, associate professor of Chinese Studies at Yonsei University Graduate School of International Relations.
The summit is also crucial for Kim -- not only to improve inter-Korean relations but also to lay a foundation for future economic relations with South Korea for economic development for the North.
"Kim wants to get the economy together. North Korea is not going to catch up to the region without integrating economically to the region and without lowering the regional tensions," Delury said.
"Kim has a big decision to make over the next two days. We know that Moon is looking to bridge the gap between Washington and Pyongyang. He could offer something more specific that Moon can deliver to Trump when he meets him in New York next week."
Moon and Trump will meet for talks in New York City next week at the U.N. General Assembly.