The list, which was generated by a computer taking age and family background into account, was released a day after the two Koreas agreed to go ahead with the first family reunions in three years.
The reunion programme was suspended after the North's shelling of a South Korean border island in November 2010, and its resumption marks a symbolic but important step.
The reunions will be held on September 25-30 at the North's Mount Kumgang resort.
The 500 candidates would be shortened to 250 by Thursday after interviews and medical exams, with the final list of 100 people announced on September 16.
Part of the selection process is ensuring candidates still have living relatives on the other side.
The push to restart the reunions was initiated last week by South Korean President Park Geun-Hye, who urged Pyongyang to "open its heart" and agree to kickstart the programme in time for next month's Chuseok holiday -- when Korean families traditionally gather together.
About 72,000 South Koreans -- nearly half of them aged over 80 -- are still alive and wait-listed for a chance to join the highly sought-after family reunion events, which select only up to a few hundred participants each time.
At the emotional, often tearful reunions, North and South Koreans typically meet in the North for two or three days before the South Koreans head home again.
The last such meeting took place in late 2010, before the North's shelling of Yeonpyeong island.
Inter-Korean relations have showed signs of improving recently after months of heightened military tensions that followed the North's nuclear test in February.
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