Despite the global concerns over the North's weapons program, Kim and South Korean President Moon Jae-in have moved towards cooperation over hostility lately, with the railway representing a literal and figurative link between the nations.
However materials needed to complete the project are subject to sanctions.
Hope for peace emerged on the peninsula as the leaders of the two Koreas met three times this year, leading to the resumption of inter-Korean exchanges and cooperation.
However, beyond on-site reviews and ceremonies, the two Koreas won't be able to make much progress without the removal of United States-led sanctions on the North.
Freight trains did run regularly across the border from late 2007 until 2008 to supply the joint Kaesong Industrial complex, but the service was suspended as relations between the two Koreas deteriorated following the election of conservative President Lee Myung-bak in Seoul and North Korean missile tests.
The South's transport minister and the North's vice railway minister took turns delivering key celebratory speeches followed by such events as track-linking, signing a railway sleeper and unveiling a signboard at the station, according to pool reports.
Two Koreas inspected 22 dismantled guard posts in each other's territories recently according to the inter-Korean agreement of the Comprehensive Military Agreement made in September.
Koreas to pledge road, rail links on divided peninsula
If sanctions are lifted on Pyongyang and construction work starts, railways and roads can be linked from the South Korean capital Seoul to the DPRK's northwestern city of Sinuiju that can be connected to the Trans-China Railway.
Japan and South Korea continue to face off over Tokyo's allegations that a South Korean destroyer targeted its fire-control radar on a Japanese patrol plane over the Sea of Japan.
The wider significance of the ceremony was also reflected in the presence of eight foreign dignitaries, primarily from neighboring countries like China, Russia and Mongolia. The ministry plans to expand the definition of enemy to include the phrase, "Every force that threatens South Korea is an enemy".
Describing the trip as a dream, Kim said the train ride to her hometown had been a big hope of hers.
"Actual construction will be pursued in accordance with progress in the North's denuclearization and the state of sanctions against the North", the ministry said in a statement.
He suggested that a part of the sanctions on Pyongyang be lifted, for example, on the railway and road connection project or special economic zones in the DPRK, in return for Pyongyang's further measures for denuclearization.
The Rodong Simnum, the official paper of the North's ruling Workers' Party, also said on Tuesday that the US must stop its provocative and malicious acts against Pyongyang, warning that such acts will impair the positive atmosphere for inter-Korean relations.
In April, North Korea shifted its policy focus toward economic development, breaking away from its earlier Byungjin line - that is, a policy emphasizing the parallel development of nuclear weapons and the economy.
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A report in the U.S. weekly Newsweek said several senior Hezbollah officials were wounded in Tuesday's air strikes. The military confirmed though that there were no deaths or damage to property in Israel .