A notice published in Communist Party newspaper Granma said the change takes effect Jan. 14, and beginning on that date islanders will only have to show their passport and a visa from the country they are traveling to.
It is the most significant advance this year in President Raul Castro's five-year plan of reform that has already seen the legalization of home and car sales and a big increase in the number of Cubans owning private businesses.
"As part of the work under way to update the current migratory policy and adjust it to the conditions of the present and the foreseeable future, the Cuban government, in exercise of its sovereignty, has decided to eliminate the procedure of the exit visa for travel to the exterior," read the notice.
Migration is a highly politicized issue in Cuba and beyond its borders.
Under the "wet foot, dry foot" policy, the United States allows nearly all Cubans who reach its territory to remain. Granma published an accompanying editorial blaming the travel restrictions on U.S. attempts to topple the island's government, plant spies and recruit its best-educated citizens.
"It is because of this that any analysis of Cuba's problematic migration inevitably passes through the policy of hostility that the U.S. government has developed against the country for more than 50 years," the editorial said.
It assured Cubans that the government recognizes their right to travel abroad and said the new measure is part of "an irreversible process of normalization of relations between emigrants and their homeland."
On the streets of Havana, the news was met with a mixture of delight and astonishment, after all the previous times over the years when officials spoke of their desire to lift the exit visa, but talk failed to turn into concrete change.
"No! Wow, how great!" said Mercedes Delgado, a 73-year-old retiree when told of the news that was announced overnight. "Citizens' rights are being restored."
"Look, I ask myself how far are we going to go with these changes. They have me a little confused because now all that was done during 50 years, it turns out we're changing it," said Maria Romero, a cleaning worker who was headed to her job Tuesday morning. "Everything they told us then, it wasn't true. I tell you, I don't understand anything."
Cubans now will also not have to present the long-required letter of invitation from a foreign institution or person in the country they plan to visit.
The measure also extends to 24 months the amount of time Cubans can remain abroad, and they can request an extension when that runs out. Currently, Cubans lose residency and other rights including social security and free health care and education after 11 months.
Still, the notice said Cuba plans to put limits on travel within unspecified sectors.
Doctors, scientists, members of the military and others considered valuable parts of society currently face restrictions on travel to combat brain drain.
"The update to the migratory policy takes into account the right of the revolutionary State to defend itself from the interventionist and subversive plans of the U.S. government and its allies," the note said. "Therefore, measures will remain to preserve the human capital created by the Revolution in the face of the theft of talent applied by the powerful."
Cuba has on some occasions denied exit visas to government when they sought to travel abroad, and dissident blogger Yoani Sanchez said she has been turned down 20 times over the last five years.
"I have the suitcase ready to travel. ... Let's see if I get a flight for Jan. 14, 2013, to try out the new law.
But she expressed concern that officials might now control travel merely by denying passports.
Granma's editorial said the measure will help address the needs of the Cuban diaspora.
More than 1 million people of Cuban origin live in the United States, and thousands more are in Europe.
Associated Press writer Anne-Marie Garcia in Havana contributed to this report.