The move, which wasn't previously outlined and is likely one of the final foreign policy decisions of Obama's term, terminates a decades-long policy that many argued amounted to preferential treatment for a single group of migrants.
"By taking this step, we are treating Cuban migrants the same way we treat migrants from other countries," Obama wrote in a statement Thursday.
"The United States, a land of immigrants, has been enriched by the contributions of Cuban-Americans for more than a century," he continued. "Since I took office, we have put the Cuban-American community at the center of our policies. With this change we will continue to welcome Cubans as we welcome immigrants from other nations, consistent with our laws."
The policy, in place for more than two decades, had applied solely to Cubans. Following a mass exodus of Cubans to the United States, former President Bill Clinton in the mid-1990s changed the "open door" policy on Cuban refugees -- first established by President Lyndon B. Johnson -- to the "wet, foot, dry foot" policy that repatriated Cubans intercepted at sea but allowed those who reach land to stay.
The US said Cuba had agreed as part of the announcement to accept migrants who were turned away from the United States back into the country.
Havana has long argued the policy encourages Cubans to make the dangerous crossing from Cuba to Florida. Immigrants from other nations have argued the policy amounts to preferential treatment for one group.
The decision was likely Obama's last move in his historic dealings with Cuba. In 2014, he reopened ties to the island nation after a half-century of frozen diplomatic ties.
"During my administration, we worked to improve the lives of the Cuban people -- inside of Cuba -- by providing them with greater access to resources, information and connectivity to the wider world," Obama said. "Sustaining that approach is the best way to ensure that Cubans can enjoy prosperity, pursue reforms and determine their own destiny."
Critics of the change in relations with Cuba, though, charge that the Cuban government hasn't improved its treatment of dissidents and other anti-democratic actions, and now lack pressure from the United States to changes its ways.
Soon after the announcement, former Florida Republican Rep. Lincoln Diaz-Balart tweeted, "Obama will continue to shower the enemies of freedom with gifts until 1/20/17."
Democratic New Jersey Sen. Bob Menendez, a Cuban-American, put out a blistering statement denouncing the move as one that "will only serve to tighten the noose the Castro regime continues to have around the neck of its own people."
He faulted the Obama administration for not consulting Congress prior to the announcement, adding, "The Obama administration seeks to pursue engagement with the Castro regime at the cost of ignoring the present state of torture and oppression, and its systematic curtailment of freedom."
But fellow Democratic Sen. Patrick Leahy of Vermont welcomed the move.
"I think it's a good idea," said Leahy, long a proponent of thawing relations between the US and Cuba. "We were telling the rest of the world they were different, and I don't think that was the right thing to do."
The Cuban government was informed of the decision to end the controversial policy towards Cuban refugees, according to a senior Cuban government official.
The US government will now consider residency requests from these Cubans in the same way other migrants are processed when they arrive into the country.
Officials said Thursday's decision does not affect Cubans already inside the United States, only future migrants who have not yet arrived.
The Department of Homeland Security has also eliminated a policy for Cuban medical professionals known as the Cuban Medical Professional Parole Program, according to an agency statement.
DHS is also eliminating an exemption that previously prevented the use of expedited removal proceedings for Cuban nationals apprehended at ports of entry or near the border.
The existing Cuban Family Reunification Parole Program is not affected by this announcement and remains in effect.
Explaining the timing of the announcement Tuesday, Obama administration officials said it took time to negotiate elements of the shift with the Cuban government. They said the unexpected nature of the move stemmed from a desire to prevent a surge of migrants hoping to get to the United States before the change.
"We did not want to speculate publicly about the likelihood of this change for fear of inviting even greater migration flows," deputy national security adviser Ben Rhodes said.
The number of Cuban migrants entering the US had doubled from 2014 to 2015, when relations were reestablished.
Following the thawing of relations between the Cold War enemies, Cubans, afraid the policy would soon end, began leaving the island in greater numbers.
Many who leave use makeshift rafts to cross the Straits of Florida into the United States.