With the highly symbolic gesture, Trump became the first sitting U.S. president to set foot on North Korean soil.
While many warn the latest summit risked normalizing friendly relations with a brutal dictator, South Korea's President Moon said the meeting was an important step toward building trust with North Korea.
Amid rejection of President Donald Trump's suggestion North Korea rebuffed Obama administration meeting requests, Obama-era Director of National Intelligence James Clapper said "that's news to me".
Peering into North Korea from Observation Post Ouellette before the meeting with Kim, Trump was briefed on the North's extensive artillery across the border that threatens the 35 million residents of Seoul, just over two dozen miles away.
The DMZ has been a regular stop for USA presidents visiting the South, a security ally - although Trump's helicopter was forced to turn back by fog in 2017 - while Panmunjom saw the first two summits between Moon and Kim previous year.
North Korea closed the area to tourists on Sunday, amid talk of a Trump-Kim meeting there, according to North Korean tour agency Koryo Tours.
"We've developed a very good relationship", Trump said, hailing a "certain chemistry" between the two leaders.
The White House on Friday declined to comment on whether Trump was scheduled to go the DMZ. "A handshake means a lot", he added.
The senator predicted that, despite the positive remarks from the two world leaders, Trump would achieve little progress in discussions about denuclearization with North Korea. "Nothing has been decided, but our position remains unchanged that we want dialogue to happen between North Korea and the USA", the statement said.
Their first meeting past year took place in a blaze of publicity, the first-ever encounter between a leader of the nuclear-armed North and a sitting USA president, whose forces and their allies fought each other to a stalemate in the 1950-53 Korean War.
Mr Trump leaves North Korean soil with Mr Kim next to him.
"The 80 million people on the Korean peninsula have been given new hope today", said South Korean President Moon.
The meeting is the third between the two leaders in just over a year, and the first since February, when their summit in Vietnam imploded without an agreement from Kim on denuclearization. "The Obama administration was begging for a meeting". The country's state-run media was silent on Sunday about both Mr Trump and the possibility of a meeting.
"If it wasn't for the great relationship with you, I don't think this meeting would have been made possible in just one day".
Earlier Sunday morning, Trump met with South Korean business leaders including the heads of Samsung, Hyundai Motor, Lotte, SK, and Poongsan groups. "I say that for the press, they have no appreciation for what we've done", Trump said.
"This would be a significant milestone in the peace process on the Korean peninsula".
And he's chastising reporters, saying "they have no appreciation for" for changes in the North, which he's calling a "very different place".
Trump made the offer to meet Kim in a message on Twitter about his visit to South Korea.
Following the meeting at the DMZ, the two leaders walked into South Korea.