North Korea allows traffic to resume in latest sign of possible thaw in relations.
About 110 South Korean factories at Kaesong employ around 40,000 North Korean workers.
“The two Koreas will be able to exchange information between cross-border personnel swiftly and more stably,” a government official told the Yonhap news agency.
The new hotlines replaced outdated copper cable hotlines that will remain as spare lines.
The hotline renovations, agreed upon in 2007, were put on hold after inter-Korean relations soured following the inauguration of Lee Myung-bak, the conservative South Korean president who has maintained a tough policy towards the North.
However, earlier this month, South Korea sent H1N1 medication to North Korea, its first humanitarian aid to the North since Lee’s appointment.
The North made a rare expression of gratitude for the aid.
North Korea also resumed dialogue with the US after the country’s nuclear envoy visited the country earlier this month in a bid to persuade the North to return to stalled international nuclear disarmament talks.
The two Koreas are still technically at war because their 1950-53 Korean War ended with an armistice, not a peace treaty.