Kim Yo Jong - the first member of the North's ruling dynasty to visit the South since the end of the Korean War in 1953 - sat a row behind Pence with South Korean President Moon Jae-in.
Much ado was made about the close physical proximity between Pence and his wife, Karen, and Kim Yo Jong, though the three never publicly spoke. Kim Yo-jong, in fact, was seated nearly directly behind the USA vice president.
Ahead of the Games, which formally opened on Friday, South Korea's government distributed guidelines to organisers, listing do's and don't's when they meet North Koreans, an official at the Pyeongchang organizing committee told Reuters.
The attendance of North Korean athletes, which followed a flurry of diplomacy in January and February, was just the tip of the iceberg, however.
'Make no mistake about it, the United States of America has viable military options to deal with a nuclear threat from North Korea but, that being said, we hope for a better path, ' he said.
He also ratcheted up his rhetoric on the North's human rights abuses in a speech to USA service members at Yokota Air Base in Japan.
The recent detente, anchored by South Korea's hosting of the Winter Olympic Games, came despite an acceleration in the North's weapons programme a year ago and pressure from Seoul's allies in Washington. USA and Japanese press initially photographed the two without Moon.
Earlier, Moon warmly greeted North Korea's 90-year-old nominal head of state, Kim Yong Nam, as they attended the VIP reception.
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"She's a pretty important person in the regime", said Michael Madden, an analyst at the U.S. -Korea Institute at the Johns Hopkins School of Advanced International Studies.
But during the Olympic's elaborate opening ceremonies, Pence found himself in an awkward position.
Other members of the North Korean delegation present at Saturday's meeting included Ri Son Gwon - who led the first sit-down talks at the Demilitarized Zone (DMZ) earlier this year, and Choe Hwi.
Pence avoided an encounter Friday with Kim Yong Nam, leaving the hotel after a five-minute stay. But privately, officials said, Pence expressed concern to Moon about his more conciliatory tone toward North Korea.
Their guests, who checked in on Wednesday, are North Korean cheerleaders who have come to perform at the winter Games in Pyeongchang, about 80 km (50 miles) from the border, one of the world's most heavily militarised frontiers.
The historic handshake was preceded by a string of events which raises speculations over the growing bonhomie between the two divided Koreas, despite the two nations being technically engaged in war.
"Our objective here today is to stand with our allies, but it's also to stand up for the truth, and to recognize that whatever images may emerge against the powerful backdrop and idealism of the Olympics, that North Korea has to accept change", he said.
The sister of the North Korean leader has arrived in South Korea, dressed in a black coat and absorbing a barrage of camera flashes.