News of the brief encounter on the sidelines of a regional forum in Manila came as the South's President Moon Jae-In urged a "peaceful resolution" to the tensions in a telephone conversation with his US counterpart Donald Trump.
Even a conventional conflict on the peninsula could could cost a million dead or wounded within months, estimates say.
Moon told Trump the South "cannot let another war to break out" on the peninsula after the 1950-53 Korean War that sealed the division of two Koreas, the presidential Blue House said in a statement.
The South's Foreign Minister Kang Kyung-Wha shook hands with her Northern counterpart Ri Yong-Ho ahead of an ASEAN Regional Forum dinner on Sunday, Yonhap said.
Kang urged Ri to accept Seoul's offers of military talks to lower tensions on the divided peninsula, and for discussions on a new round of reunions for divided families.
But Ri retorted: "Given the current situation in which the South collaborates with the US to heap pressure on the North, such proposals lacked sincerity," the unnamed official was quoted as saying.
Kang reiterated again "the South's sincerity" and repeated a call for Pyongyang to come forward for talks, the official said.
It was the first time cabinet-level officials from the two Koreas had met since Moon -- who urges engagement with the North as well as sanctions to bring it to the negotiating table -- took power in May.
The encounter came a day after the UN Security Council passed sweeping sanctions on the North over its first successful test of an intercontinental ballistic missile (ICBM), which sparked global alarm.
The growing threat from the nuclear-armed North dominated the annual forum, which came days after the North's second ICBM test.
'Growing threat'
The missile launches have added to tensions on the peninsula with the US leaving open the possibility of military action against Kim Jong-Un's regime.
White House National Security Advisor H.R. McMaster vowed to "provide all options" on the country in a recent interview with CNN.
But Moon, in a phone conversation with Trump on Monday, urged calm and "peaceful and diplomatic resolution".
The two allies are due later this month to start an annual joint military drill hated by Pyongyang, which habitually slams it as a rehearsal for invasion.
The White House said the two leaders "affirmed that North Korea poses a grave and growing direct threat to the United States, South Korea, and Japan, as well as to most countries around the world".
They welcomed the sweeping new sanctions passed by the UN Security Council in a 15-0 vote on Saturday in a bid to step up pressure on Pyongyang over its weapons programmes.
The measures ban exports of coal, iron and iron ore, lead and lead ore as well as fish and seafood from the impoverished state in a move aimed at slashing Pyongyang's foreign revenue by a third.
Trump hailed the vote, thanking Russia and China for backing a measure that either could have halted with their UN veto.
"Just completed call with President Moon of South Korea. Very happy and impressed with 15-0 United Nations vote on North Korea sanctions," Trump tweeted.
Pyongyang has not officially responded to the latest UN sanctions.
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