John Kerr, 71, the first US Secretary of State to visit Cuba in 70 years on Friday, presided over the ceremony in Havana.
The US flag was raised by the same US marines who brought it down in 1961.
"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.
"Thank you for joining us at this truly historic moment as we prepare to raise the flag ... symbolizing the restoration of diplomatic relations after 54 years," Kerry said at the ceremony, addressing the crowd in both English and Spanish. He added, ''The time is now to reach out to one another as two peoples who are no longer enemies...but neighbors.''
According to BBC, 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.
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