Moon and Kim Jong Un posed for pictures together, embracing for a hug, during the meeting.
The surprise meeting highlighted Moon's efforts to get the historic summit back on track, and showed inter-Korea relations are in a far better state than those between Washington and Pyongyang.
Ahead of their first summit last month, Kim and Moon established a hotline that they said would enable direct communication between the leaders and would be valuable to defuse crises, but it was unclear whether it was used to set up the latest meeting. "We are carefully watching the developments".
USA officials have talked about a comprehensive one-shot deal in which North Korea fully eliminates its nukes first and receives rewards later. "The world, and North Korea in particular, has lost a great opportunity for lasting peace and great prosperity and wealth".
If the summit is not held, some analysts warn that the prospect of a military confrontation between the two nations would rise, while a successful summit would mark Trump's biggest foreign policy achievement.
Saturday's meeting is only the fourth time serving leaders of the two Koreas, who remain technically at war, have ever met.
The leaders of North and South Korea hold a surprise meeting at the demilitarized zone, for the second time.
It wasn't immediately clear how the rivals organized what appeared to be an emergency summit. We're talking to them right now.
They were accompanied by South Korean intelligence chief Suh Hoon and his North Korean counterpart Kim Yong Chol, who is in charge of inter-Korean affairs. Moon then walked inside and shook hands with Kim Jong Un and posed for a photo in front of a large landscape painting, video clips show.
North Korea has conducted six nuclear tests since 2006 and numerous tests of intercontinental ballistic missiles that could, theoretically, reach the US.
Beijing urged the US and North Korea on Friday to "meet each other halfway and stay committed to addressing each other's concerns".
"It was a very nice statement they put out", Trump said at the White House.
Diplomatic observers earlier said cancelling the summit would increase the risk of confrontation over the Korean peninsula and push Pyongyang closer to Beijing, while the United States would become more suspicious of how China managed its relations with the North.
Defense Secretary Jim Mattis told reporters diplomats were "still at work" and said Trump had just sent a note out on the summit, which could be back on "if our diplomats can pull it off".
Much ahead of Choe Son-Hui's warning, Kim Kye-Gwan, North Korea's first foreign minister threatened to scrap the summit if the USA forces North Korea to abandon nuclear weapons.
In a tweet Friday, the president said his administration is having very productive talks with North Korea about reinstating the meeting.