The Sunshine Policy is the foundation for South Korea's approach to North Korea in terms of foreign relations. It was first established and put into practice during the presidency of Kim Dae-jung. This policy led to the initiation of cooperative business ventures between the two Koreas, including the development of a railway and the establishment of the Mount Kumgang Tourist Region, which remained open to South Korean visitors until 2008, when a shooting incident occurred and visits were halted. Despite the challenges, three family reunions were also arranged.

In 2000, the leaders of the two Koreas, Kim Dae-jung and Kim Jong-il, met for the first time since the Korean War at a summit. During this meeting, the June 15th North–South Joint Declaration was adopted, in which the two Koreas agreed on five points: the pursuit of independent reunification, peaceful reunification, addressing humanitarian issues like separated families, promoting economic cooperation and exchange, and holding a dialogue between the two Koreas. However, after the summit, talks between the two states stalled. Criticism of the policy increased and the Unification Minister Lim Dong-won faced a no-confidence vote on September 3, 2001. After a meeting with newly elected President George Bush, Kim Dae-jung felt humiliated and privately expressed his disappointment with President Bush's hardline stance. This meeting also led to the cancellation of any possibility of a North Korean visit to South Korea. With the Bush administration labeling North Korea as part of the "axis of evil," North Korea withdrew from the non-proliferation treaty, expelled UN inspectors and resumed its nuclear program. In 2002, a naval confrontation over disputed fishing territory resulted in the death of six South Korean naval soldiers, further deteriorating relations.