The US has reopened its embassy in Cuba more than 54 years after it was closed, in a symbolic step signalling the warming of ties between both countries.
John Kerry, the first US Secretary of State to visit Cuba in 70 years, presided over the ceremony in Havana.
The US flag was raised by the same US marines who brought it down in 1961.
Cuba reopened its embassy in Washington last month. But issues remain, with Cuban leader Fidel Castro blasting the US for not lifting its trade embargo.
In an open letter on Thursday, Mr Castro said the US owed Cuba millions of dollars because of its 53-year-long embargo. The letter makes no mention of the reopening of the US embassy.
Three marines who lowered the American flag for the last time on 4 January 1961 raised it again during Friday’s historic ceremony in Havana. They are now retired and in their late 70s.
“I’m gonna love seeing that flag go back up,” said former marine Jim Tracy, 78, in a US State Department video released ahead of the ceremony.
At the scene – Will Grant, BBC Cuba correspondent, Havana
It is a typical hot summer’s morning in Havana – humid and sticky. But it’s a warmth which perhaps befits the moment in which Cuba and the United States finally put almost six decades of Cold War hostility behind them.
And the sea breeze off the Malecon, Havana’s seafront promenade, is refreshing the dignitaries that have gathered on the front lawn for this historic reopening ceremony.
If a lot of the diplomats present thought they’d never see this day, millions of ordinary Cubans certainly never thought they would. Crowds have started to build up around the perimeter fence – some carrying Cuban flags, others the Stars and Stripes.
But the flag that really matters today, the one going up the flagpole at the embassy, will be raised by the same three marines who brought it down in 1961.
Cuban leader Raul Castro and US President Barack Obama agreed to restore ties in December last year.
While trade and travel restrictions have been relaxed, the Republican-led US Congress has not lifted the trade embargo the US imposed on the communist-run island in 1960.
Cuba says the embargo – which it calls a blockade – is hugely damaging to its economy.
It says relations will be fully restored only once it is lifted.
Fidel Castro’s letter was published in state newspaper Granma to mark his 89th birthday.
Fidel Castro: Cuba’s revolutionary leader
- Castro survived over 600 assassination attempts to become the longest serving non-royal leader of the 20th Century
- In 1959 he took power in the Cuban Revolution after several years of guerrilla warfare in the mountains
- The CIA sponsored an unsuccessful invasion by 1,500 Cuban exiles at the Bay of Pigs in 1961. Castro took personal charge of the defensive operation
- In 1962 the Cuban Missile Crisis brought the world to the brink of nuclear war
- 125,000 Cubans emigrated to the US in the Mariel Boatlift in 1980
- In 2008 Castro stepped down from power and handed over the reins to his younger brother Raul.
In it, Mr Castro said Cuba was committed to “good will and peace in our hemisphere” but added: “We will never stop fighting for the peace and welfare of all human beings, regardless of the colour of their skin and which country they come from.”
Fidel Castro led his country from the Cuban Revolution, in 1959, until 2006, when he stood down because of undisclosed health problems.
He passed on power to his younger brother, Raul, who embarked on a number of economic reforms.