to improve ties between Havana and Washington.
Obama has already made it easier for 12 categories of Americans to visit the communist island, no longer requiring them to apply for a license before traveling.
But regular tourism remains off-limits. Trips are limited to specific visits including education, sports, culture or journalism.
Those allowed to visit Cuba can bring back home $100 worth of cigars or rum, and pay for purchases on the islands with credit cards. US companies are now allowed to invest in Cuba’s tiny but growing private sector, which emerged under modest economic reforms launched by Castro.
In March, the two countries re-established a direct telephone link and the US Treasury Department removed sanctions on some 60 individuals, shipping companies and trading firms.
So far teams from the two countries have met four times seeking to work out the terms for re-opening their embassies.
Officials say the talks have made progress, but nothing concrete was announced at the last round, held in Washington a week ago, and sticking points remain.
The communist authorities in Havana have been particularly angered by US democracy programmes and have so far not met demands that American diplomats be allowed to meet freely with dissidents.
The island is still subject to a US trade embargo put in place in 1962, which Obama has called on Congress to lift.
Friday’s decision means only Iran, Sudan and Syria remain on the State Department’s blacklist of state sponsors of terrorism.
The diplomatic path has been advancing since December, and Castro and Obama also held a historic meeting in Panama in April on the sidelines of a regional summit.
Castro traveled earlier this month to the Vatican to meet Pope Francis, who was instrumental in helping Washington and Havana break the ice.
In the early days of the communist regime in the 1960s, Raul’s brother Fidel Castro expelled some 100 religious figures and nationalized numerous Church properties after it opposed the new regime.