The agreement is a major foreign policy achievement for the president, and it comes alongside months of talks with Cuba after the leaders of the two countries agreed in December to begin warming relations.
Obama’s remarks about reaching the diplomatic agreement are set for 11:00 am (1500 GMT) in the White House Rose Garden.
Diplomatic ties have been frozen since 1961.
From the Bay of Pigs invasion to the Missile Crisis, antagonism across the narrow Straits of Florida often threatened to turn the Cold War hot.
Both countries are currently represented by “interest sections” and US and Cuban diplomats are not allowed to go out of Havana and Washington without official authorization from the host countries.
But the agreement was panned particularly by US critics who say it gives too much legitimacy to Cuba’s single-party Communist government.
“This July 4, reports of a new US embassy in Havana will legitimize repression in Cuba, not promote the cause of freedom and democracy,” said Republican presidential hopeful Jeb Bush about the deal.
“[Obama] goes legacy shopping as he opens a US embassy in Cuba that won’t help freedom, democracy or the Cuban people,” tweeted US lawmaker Ileana Ros-Lehtinen, who is Cuban born and serves on the House Committee on Foreign Affairs.
Many Cuban-Americans oppose restoring ties with Havana’s government. Republican presidential candidates who have ties to Cuba, including Marco Rubio and Ted Cruz, have been outspoken in their opposition to the thaw.
The move was hailed by visiting Brazilian President Dilma Rousseff who described better US-Cuba relations as “a very decisive milestone and point in time in US relations with Latin America”.
“It is really about putting an end to the last lingering vestiges of the Cold War, and it ultimately elevates the level of the relations between the US and the entire region,” she said.
She said Obama’s move was a “gesture to all of Latin America and also to world peace at large. It is an important example of relations to be followed”.
Latin American allies have generally hailed thawing US-Cuba ties as transformative for Washington’s role in the region.
Road to agreement
The current head of the US interests section in Havana, Jeffrey DeLaurentis, is expected to deliver a message on reopening embassies from Obama to Cuban President Raul Castro.
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.
Havana had vehemently protested its 1982 inclusion on the blacklist, which hampered its access to global markets.
Polls show a majority of Americans support Obama’s efforts to improve ties.
But the island is still subject to a US trade embargo put in place in 1962.
In the meantime, other vestiges of ideological animosity are rapidly receding into history.
Travel and communications restrictions between the two countries have been significantly eased.
An American orchestra and sports team toured the Caribbean island for the first time in decades.
The White House has said that a presidential visit is possible before Obama leaves office in 2017.
