American Vice-President Mike Pence has decided not to attend dinner at which he was scheduled to share a table with North Korea’s Kim Yong Nam who is a ceremonial head of state.
He briefly met him but they tried to avoid direct contact, Yonhap news agency reports.
South Korean President though did shake hands with North Korean leader Kim Jong Un’s sister at the opening ceremony of the Winter Olympics.
The Games are taking place despite tension over the North’s nuclear ambitions.
Pence and Kim Yong Nam were being hosted by South Korean President Moon Jae In before the opening ceremony in Pyeongchang. But the American left the reception venue after only five minutes, South Korea’s Yonhap said.
At the event, Mr. Moon said he hoped the Winter Olympics would be remembered as the "day peace began". He is due to meet the North Korean delegation for talks on Saturday according to Yonhap.
Mr. Kim's sister Kim Yo-jong is the highest profile member of the North Korean delegation to the Games.
She is the first immediate member of the North's ruling family to visit the South since the 1950-1953 Korean war.
Ms. Kim, who is said to be very close to her brother, was promoted to the North's powerful politburo last year.
She is on a US sanctions list over alleged links to human rights abuses in North Korea.
Ms. Kim is thought to be about 30 years old, around four years younger than her brother.
Her visit is being seen as a sign that Kim Jong-un is serious about improving ties with the South, the BBC's South Korea correspondent Laura Bicker reports.
She adds that some are also speculating that Ms. Kim might be bringing a message from her brother.
At the Winter Olympics, both North and South Korea will march under one flag at the opening ceremony.
Alongside 22 athletes, Pyongyang has sent more than 400 delegates to the Games, including a team of cheerleaders and an orchestra.
However, the opening ceremony was not shown on North Korean state TV, which was broadcasting patriotic songs and slogans celebrating industry and the armed forces.
The sports diplomacy comes at a time of improved relations between the two Koreas, although experts have cautioned that it does not put an end to underlying regional tensions.
The Korean peninsula has been divided since the 1950-53 war and the two sides have never signed a peace treaty.