At a glittering but sub-zero ceremony, South and North Korea brought the crowd to its feet as they entered behind the blue-and-white Korean unification flag.
South Korean President Moon Jae-in shook the hand of a smiling Kim Yo Jong, the powerful sister of North Korean leader Kim Jong Un, as he entered the VIP seating section, and again as the Korean athletes marched.
It cemented what has been a rapid improvement in Korean ties since North Korea -- after months of fierce nuclear rhetoric and missile tests -- agreed last month to attend its first Olympics in the South.
Kim Yo Jong, the first member of the North's ruling dynasty to venture South since the Korean War, forms part of the highest level delegation ever to cross the border.
South and North Korea last marched together at the 2006 Winter Olympics in Turin. They also made the symbolic gesture at the opening of the 2000 and 2004 Olympics in Sydney and Athens.
"You will inspire us all to live together in peace and harmony despite all the differences we have," said International Olympic Committee president Thomas Bach, before Moon declared the Games open.
In highly unusual scenes, hawkish US Vice President Mike Pence sat directly in front of the North Korean delegation.
Kim Yu-na, South Korea's former gold medal-winning figure skater, wore skates as she lit the Olympic cauldron, after being handed the torch by two members of the joint Korean women's ice hockey team -- one player from the North and one from the South.
Lee Hee-beom, head of the Games organising committee, said "the North and South have become one through the Olympics".
"Pyeongchang Olympics will become the hope and light for everyone that hopes for peace, not only on the Korean peninsula but in northeast Asia and the entire world," said Lee.
In contrast, Russia's athletes entered the ceremony behind a neutral flag after their team was suspended over a doping scandal. Despite the ban, 168 "Olympic Athletes from Russia" will compete in Pyeongchang.
Shivering athletes and spectators are bracing for one of the coldest Winter Olympics on record, with real-feel temperatures plumbing minus 10C at the opening ceremony.
Japan's speed skaters are among the athletes who decided it was too cold to brave the open-air ceremony, while organisers handed out heat packs, blankets and hats to keep spectators warm.
Expectations are sky-high for an array of stars at Pyeongchang, including American skiers Mikaela Shiffrin and Lindsey Vonn, while the drama in figure skating centres on whether Japan's "Ice Prince" Yuzuru Hanyu can recover from injury to retain his crown.
Potential winners also include French flag-bearer Martin Fourcade in biathlon, hoping to add to his two gold medals in Sochi in 2014.
Alpine giant slalom great Marcel Hirscher of Austria is also among the gold medal hunters.
The sensational 15-year-old Alina Zagitova of Russia will take the spotlight in women's figure skating, where a showdown is expected with her fellow Russian teen, Evgenia Medvedeva.
Another teenage breakout star could be Chloe Kim, 17, the American whose parents are Korean and who is tipped for gold in snowboard as well as adulation by the host nation.
For the South Koreans, major home hopes rest on the slender shoulders of yet another teenage girl.
In short-track speed skating, the 19-year-old Choi Min-jeong is among the favourites for a gold-medal sweep of all four races.
Competition gets into full swing on Saturday with five gold medals available, in ski jumping, cross country skiing, biathlon, speed skating and short-track speed skating.
Ninety-one countries -- plus the "Olympic Athletes from Russia" -- are competing for 102 gold medals in 15 different sports.
The Games end on February 25.
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