North Korea on Thursday freed a South Korean worker it had detained since March, an apparently conciliatory gesture to the South following 18 months of bitter hostility.
The worker identified as Yu Seong-Jin was handed over to officials from his company Hyundai Asan, unification ministry spokesman Chun Hae-Sung told reporters. Yu is expected to cross the border at 7:00 pm (1000 GMT), he said.
Hyundai Group chairwoman Hyun Jung-Eun had crossed into the North Monday to seek the release of Yu, days after former US president Bill Clinton went to Pyongyang to secure the freedom of two American journalists.
Yu was an engineer working at the Seoul-funded Kaesong industrial estate north of the border for Hyundai Asan, the group subsidiary which handles joint business projects with the North.
The hardline communist state detained him on March 30, accusing him of insulting its political system and urging a northern worker to defect.
Inter-Korean relations have been icy since a conservative government took office in Seoul in February 2008 and adopted a tougher stance on relations with the North.
International tensions have also risen this year following the North's latest nuclear and missile tests and a US-led drive for tougher sanctions.
However, North Korean officials signalled to Clinton that they want better relations, according to US officials.
An association representing South Korean firms in Kaesong welcomed the release and urged the two Koreas to prevent a recurrence of such incidents and improve ties.
"We hope (the release) will improve frozen ties between South and North Korea and rejuvenate the Kaesong industrial complex," it said in a statement.
Hyundai chairwoman Hyun earlier extended her stay in the North until Friday, heightening speculation that she would meet leader Kim Jong-Il as she did in 2007.
On July 30 the North also detained the four-member crew of a South Korean squid fishing boat which sailed across the border due to a faulty navigation system.
Analysts say the North's priority is improving relations with the United States but it must mend ties with South Korea to some extent as part of the process.
The Seoul presidential office welcomed the release but said its policy would not change.
"It seems a bit too late, but it is a relief that Yu is finally returning to his family," said spokesman Lee Dong-Kwan.
"The government will continue to maintain its policy consistency toward North Korea," Lee told reporters.
Some 40,000 North Koreans work for 105 South Korean companies at Kaesong, which was developed mainly by Hyundai. The auto, shipbuilding and construction giant pioneered business exchanges with the North, opening its first venture -- the Mount Kumgang resort on the east coast -- in 1998.
But its projects have been hard hit by the worsening relations.
The Kaesong estate is the last one still operating. And its future has become increasingly clouded since Pyongyang demanded huge extra wage and rent payments from Seoul and detained the engineer.
Tours to Mount Kumgang have been suspended since July 2008, when North Korean soldiers shot dead a Seoul housewife who strayed into a poorly marked military zone.