The agreement is a major foreign policy achievement for the U.S. president, and it comes alongside months of talks with Cuba after the leaders of the two countries agreed in December to begin warming relations.
It was Castro and Obama who agreed in December to start formal talks over restoring relations, after months of secret talks between aides.
The pair held a historic meeting in Panama in April -- the first sit-down between US and Cuba leaders since 1956.
In May, the United States paved the way for further rapprochement by taking Cuba off the list of state sponsors of terrorism.
The White House has said that a presidential visit is possible before Obama leaves office in 2017.