U.S. President Barack Obama and Cuban President Raul Castro greeted each other Friday evening and shook hands at the Summit of the Americas here.
Obama administration officials said the interaction between the two leaders was informal, without substantive conversation.
But Obama and Castro are expected to meet on Saturday.
Obama said earlier Friday he is pleased that Cuba is being represented for the first time at the summit.
He said in a speech to civil society leaders at the summit that he hopes efforts to restore U.S. diplomatic relations with Cuba will improve the lives of the Cuban people.
U.N. Secretary-General Ban Ki-moon praised Obama and Castro at the summit's opening ceremony.
"I would like to once again commend the leadership of President Obama of the United States and President Castro for initiating normalization of bilateral relations,'' he said.
Obama, in his address, called civil society "the conscience of our countries. It’s the catalyst of change." He added, "Strong nations don’t fear active citizens. Strong nations embrace and support and empower active citizens."
Referring to a telephone conversation between the two leaders on Wednesday, Deputy National Security adviser Ben Rhodes said they reviewed efforts to fully restore U.S- Cuban diplomatic relations, but "differences" still remain between them.
Those differences were evident ahead of Obama’s arrival late Thursday in Panama City, when Castro supporters attacked Cuban dissidents who were laying a wreath to a bust of Cuban hero Jose Marti outside the Cuban Embassy, kicking, shoving and insulting them.
Dissident speaks out
Among those attacked was Iris Tamara Perez Aguilera, a dissident who traveled to Panama from Cuba. Speaking to VOA from a wheelchair, she said the assailants came out of the Cuban Embassy. The dissident said she wants the world to see what the Cuban government is doing to its people, and she questions Obama’s efforts.
She said Obama wants to soften his position toward the Havana government, but she wondered what other proof he needs that the Castros are, in her words, "murderers and dictators."
Obama administration officials said they have expressed serious concerns about the incident and said they made it known the attacks were “grossly inconsistent” with the spirit of dialogue at the summit.
The incident did not appear to derail Obama’s plans for normalizing ties with the Castro government. At Friday’s Civil Society Forum, Obama said he accepts there are differences.
"As we move toward the process of normalization, we’ll have our differences government-to-government with Cuba on many issues, just as we differ at times with other nations within the Americas, just as we differ with our closest allies. There’s nothing wrong with that," said Obama.
Upon his arrival, Obama was welcomed by President Juan Carlos Varela. Panama's leader congratulated him "on all the effort he's doing to unite our continent." The two leaders held bilateral talks on Friday and Obama also made an unannounced tour of the Panama Canal.
Apart from a couple of brief, informal encounters, the leaders of the United States and Cuba have not had any significant meetings since Castro's older brother Fidel Castro toppled U.S.-backed dictator Fulgencio Batista in a 1959
Earlier in Jamaica, Obama stopped short of announcing a U.S. government decision to take Cuba off Washington's list of state sponsors of terrorism.
"As you know, there’s a process involved in reviewing whether or not a country should be on the State Sponsor of Terrorism list. That review has been completed at the State Department. It is now forwarded to the White House," Obama said.
But the U.S. leader said he had not yet made a decision.
"The one thing I will say is that throughout this process, our emphasis has been on the facts. So we want to make sure that, given that this is a powerful tool to isolate those countries that genuinely do support terrorism, that when we make those designations we’ve got strong evidence that, in fact, that’s the case," he said.
Senator Ben Cardin of Maryland, the top Democrat on the Senate's Foreign Relations panel, confirmed the agency has recommended removing Cuba from the list. "The United States has a unique opportunity to begin a fresh chapter with Cuba,'' he said.
Obama has long signaled he is willing to remove the island nation from the list as part of the normalization in diplomatic relations between the two countries he announced late last year after a five-decade split. Three other countries are on the U.S. list, accused of repeatedly supporting global terrorism: Syria, Iran and Sudan.
This week's U.S. overtures to Cuban leaders play against a backdrop of questions about Cuba and human rights – as well as protests.
WATCH: Related video report by Zlatica Hoke
Sam Verma contributed to this report from Washington