Kim Yo Jong's name was included in a list of officials submitted to the ministry before the delegation crosses the Demilitarized Zone on Friday.
If the visit takes place, she would become the first member of North Korea's ruling family to visit South Korea and it would be seen here as a sign that the Kim regime is serious about improving ties with the progressive government in Seoul.
North Korean authorities had already said they would send Kim Yong Nam, who is technically North Korea's head of state, as part of a 22-member high-level delegation that will attend the opening ceremony of the Games.
Speculation had already been rife in South Korea that Kim Jong Un might send his younger sister, and that was only fueled when Kim Yo Jong, wearing a broad smile, was shown on North Korean television waving farewell to the cheering squad that departed Pyongyang station for South Korea Tuesday.
Moon Jae-in's government has been eager to improve ties with the North and also to show the Trump administration, amid increasing talk about military action, that diplomacy can work with Pyongyang.
"The purpose of this high level delegation visit from the North is to celebrate the opening of the Pyeongchang Winter Olympics so the group is composed of the officials from Workers' Party, government and sports industry," the Unification Ministry, which is in charge of the South's relations with the North, said Wednesday.
"Kim Yo Jong seems to have been included so the North Korean delegation will be on the same level as other nations and their family members who are participating the celebration," it said.
Vice President Mike Pence will be attending the opening ceremony of the Olympics on Friday, and Ivanka Trump, the president's daughter, is reported to be planning to attend the closing ceremony.
Pence has refused to rule out the possibility of meeting with North Korean representatives during his trip. "We'll see what happens," he said en route to Asia.
Also on the list sent to the South on Wednesday were Choe Hwi, the chairman of the National Sports Guidance Committee, and Ri Son Kwon, the head of the agency in charge of inter-Korean affairs.
Both Kim Yo Jong and Choe Hwi have been directly sanctioned by the United States government, accused of human rights violations because they are both involved in censorship activities.
That would make it difficult for Pence to meet with either.
The delegation will visit the South for three days starting Friday, the Yonhap News Agency reported.
They have an older brother, Kim Jong Chul, who is not thought to play a significant role in the regime but is sometimes spotted at Eric Clapton concerts abroad.
The three were born to North Korea's second leader, Kim Jong Il, and his third wife, Ko Yong Hui, an ethnic Korean dancer who was born in Japan. All three spent several years attending schools in Bern, Switzerland.
The Kim family asserts its legitimacy to lead North Korea through a kind of divine right they say was ordained upon them from Mount Paekdu, a volcano on the border with China that has mythical status in Korean culture.
Kim Jong Un, who is 34, has played up this "Paekdu bloodline" as he has sought to cement his claim to be his father's rightful successor.
Kim Yo Jong shares this blood but, as a woman, she could never be leader of this strict Confucian society. She has, however, been elevated up through the regime to play an important supporting role to her brother.
She was promoted to deputy director of the Workers' Party Propaganda and Agitation Department in 2014, which led to the Treasury Department to sanction her by name in January for her role in censoring information in North Korea.
She seems to have a crucial role in ensuring things run smoothly when it comes to her brother's image.
She was seen working during a big parade in Pyongyang in April, rushing out from behind pillars to bring paperwork to her brother. She also appeared on stage with him during the opening of a landmark construction project in the capital, Ryomyong Street, where she was dressed in a functional black suit and appeared to be coordinating photographers and other logistics.
Then, in October, Kim promoted her to the powerful political bureau of the ruling Workers' Party, making her the only woman there.
As with many other figures in North Korea's opaque leadership, little else is known about Kim Yo Jong, who can be seen wearing a band on her wedding ring finger.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)