US Secretary of State Mike Pompeo said he was placing Cuba back on a blacklist of state sponsors of terrorism, a last-minute roadblock to expected efforts by President-elect Joe Biden to ease tensions.
The terror designation severely hampers investment by foreigners who will now risk US prosecution and can only be removed after a formal review by the Biden administration, meaning it may be in force for months.
With nine days left in office, President Donald Trump's administration pointed to Cuba's ties with Colombian rebels and Venezuela's leftist government and its welcome to several US fugitives.
"With this action, we will once again hold Cuba's government accountable and send a clear message: the Castro regime must end its support for international terrorism and subversion of US justice," Mr Pompeo said in a statement, referring to former leaders Fidel and Raul Castro.
"The United States will continue to support the Cuban people in their desire for a democratic government and respect for human rights, including freedom of religion, expression and association," he said in a statement.
Cuba's foreign affairs minister Bruno Rodriguez has slammed the Trump administration for "political opportunism" over the move.
"We condemn the cynical and hypocritical qualification of Cuba as a state sponsor of terrorism, announced by the United States," Mr Rodriguez wrote on Twitter.
"The political opportunism of this action is recognized by everyone honestly concerned about the scourge of terrorism and its victims."
Then-president Barack Obama in 2015 delisted Cuba as a state sponsor of terrorism as he moved to normalize relations and declared the half-century US effort to isolate the island to be a failure.
Mr Trump has reversed many of Obama's overtures to Cuba and also imposed sanctions on its leftist ally Venezuela, a stance that helped win support among immigrant communities in Florida, a crucial state in US elections.
Mr Biden has indicated he wants to return at least to some engagement started under Obama and blocked by Mr Trump, including allowing Cuban-Americans to visit family and send money.
To remove Cuba from the terror list, Antony Blinken, Mr Biden's nominee for secretary of state, would have to initiate a review that shows that Havana did not engage in terrorism over the past six months.
The move is the latest in a blitz of major decisions by Mr Pompeo in his final days in office, with most of Washington focused on whether to remove Trump for inciting a deadly riot at the US Capitol on 6 January of supporters who sought to stop the ceremonial certification of Mr Biden's victory.
Since Saturday, Mr Pompeo has also designated Yemen's Houthi rebels as a terrorist group, defying warnings from aid groups, and relaxed rules on US engagement with Taiwan.
Only three other countries are on the blacklist - US nemeses Iran, North Korea and Syria.
Mr Trump removed Sudan late last year after its democratic transition, compensation for past attacks and agreement to recognise Israel.