Mr Kim said his country was ready to discuss ending nuclear tests if six-party talks on denuclearisation resumed, Russian media reported.
The pair also discussed plans for a pipeline that would pass through the North's territory to South Korea.
There has been no official comment so far from North Korea.
The Russian gas company, Gazprom, has reportedly been working for years on the deal for the pipeline, which would stretch more than 1,700km (1,000 miles).
South Korean media reports that the deal could be worth up to $100m (£60m) annually in transit handling fees for the impoverished North.
But the BBC's Lucy Williamson in Seoul says it would also give Pyongyang de facto control over a key energy supply to the South, and without a major step forward in relations on the peninsula, that is likely to make some in Seoul very nervous.
Key allyThe meeting between the two leaders took place at a military base, near Siberia's eastern mountains, some 5,550km (3,450 miles) east of Moscow.
It is Mr Kim's first visit to Russia since 2002.
Photographs showed the two leaders sitting together looking jovial and relaxed; Mr Kim smiling openly in his trademark beige suit, and Mr Medvedev leaning in to him with a smile.
A spokesman for the Russian president described the talks as "frank and substantial".
"Kim Jong-il expressed readiness to return to six-party talks without preconditions," said Mr Medvedev's spokeswoman, Natalya Timakova.
"In the course of the talks the North Koreans will be ready to resolve the issue of imposing a moratorium on testing and production of missile and nuclear weaponry."
The meeting in Russia follows weeks of new discussions between North Korea's nuclear envoy and his South Korean and US counterparts over how to return to formal negotiations on the North's nuclear programme.
In 2009, Pyongyang walked out of six-party talks with South Korea, the US, Japan, China and Russia, and conducted its second nuclear test soon after.
The meeting was also a chance to discuss economic ties between North Korea and its eastern neighbour.
North Korea has been increasingly vocal about its need for aid and investment to prop up its ailing economy.
With speculation that Mr Kim returned disappointed from his recent trips to China, analysts are wondering whether the reclusive leader is looking to his other key ally for help, our correspondent says.
On the eve of Mr Kim's visit, Moscow announced it was providing 50,000 tons of wheat to Pyongyang.
Mr Kim arrived in his armoured train in the border town of Khasan in the Russian Far East on Saturday.
The itinerary for his visit, which is expected to last about a week, has largely been kept secret because of Mr Kim's concerns for his personal safety.
During his first few days in Russia, Mr Kim is reported to have visited a dam north of Vladivostock, taken a swim in the waters of Lake Baikal, and toured a Soviet-era aviation plant.
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