Describing their meeting as "historic," Obama said the two countries can end the antagonism of the Cold War era, although he also said he would continue to pressure the communist-led country on its human rights record.
"We are now in a position to move on a path toward the future," Obama told Castro as they met in Panama, where they were both attending the Summit of the Americas. "Over time it is possible for us to turn the page and develop a new relationship between our two countries."
The two men agreed in December to try to restore diplomatic relations broken off by Washington in 1961. Since then Obama has relaxed some U.S. restrictions on travel and trade with Cuba that are part of a longstanding U.S. policy of trying to squeeze the Caribbean island into changing.
Obama and Castro, who spoke by telephone in December and this week before the Panama summit, sat side by side in a small conference room, the mood cordial but businesslike. Each nodded and smiled at some of the comments made by the other in brief statements to reporters before they began their talks.
Castro said he would continue to take steps toward normalizing relations with Washington, and was open to
discussing human rights and other issues.
"We are willing to discuss everything but we need to be patient, very patient," said 83-year-old leader, who took over as president of Cuba in 2008 after his older brother, Fidel Castro, stepped aside because of ill health.
He apologised to Obama, saying the current president could not be blamed for actions that came before.
Terrorism listing
Obama, 53, now appears to be close to removing Cuba from a U.S. list of countries that it says sponsor terrorism. Castro's government has called the country's inclusion on the list a hindrance to restoring diplomatic ties.
Cuba was first placed on the list in 1982 when it supported Marxist rebellions in Latin America but that backing stopped with the end of the Cold War. The only other countries currently on the list are Iran, Syria and Sudan
Taking Cuba off the U.S. terrorism list would would ease some financial sanctions against the island and accelerate the detente between Obama and Castro, although it is not clear how soon Obama will announce it.
Obama, a Democrat, has faced some criticism inside the U.S. Congress for his dramatic shift on Cuba policy. Critics say he has given up too much without first insisting on political reform on the island.
The U.S. president can continue to ease specific sanctions but the trade embargo against the island can be overturned only by the Republican-controlled Congress.
Relations between the United States and Cuba deteriorated rapidly after Fidel Castro and his rebel army drove out
U.S.-backed dictator Fulgencio Batista in January 1959. The island soon steered leftward and forged a close alliance with the Soviet Union.
The highest-level U.S.-Cuba meeting after the revolution took place in April 1959, between then-Vice President Richard Nixon and Fidel Castro, who was Cuba's prime minister at the time.
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