"I would like to make clear ... this will be my last term," CNN quoted the 81-year-old leader of the Communist island nation as saying during a televised speech.
Cuba's National Assembly named Miguel Diaz-Canel, an engineer in his early 50s, to be Castro's first vice president, CNN reported. Diaz-Canel has served as minister of higher education and vice president of the council of ministers.
Castro called the selection of Diaz-Canel a "definitive step in the configuration of the future leadership of the country, through the gradual and organized transfer to the new generation taking over the main roles."
Castro became acting president in 2006 when his older brother Fidel fell ill and was officially elected to a five-year term in 2008.
Voice of America reported Fidel Castro received a standing ovation when he made a rare public appearance at the National Assembly's opening session in Havana.