Cuba marked the 50th anniversary of its revolution in low key style, reflecting the island's worsening economy in the wake of three devastating hurricanes.
President Raul Castro delivered a speech from the same balcony in Santiago where his brother Fidel proclaimed victory in January, 1959.
He praised the Cuban people for enduring United States sanctions, but stressed that the country faces difficult times.
Raul Castro received an ovation, along with other party leaders, from 3,000 guests at the start of Thursday evening's festivities.
"Let's not kid ourselves by believing that from here on, it's all going to be easy. Maybe from here on, it's going to be more difficult," Raul Castro cautioned.
Despite hardships he blamed on 46-year-old US sanctions, the president stressed: "this hasn't been a failure, not even under these conditions. It has been a constant fight."
Former US president John F Kennedy declared the embargo in February 1962, before the Soviet missile crisis, which took the world to the brink of nuclear war.
The two nations, separated by just 145 kilometres of water, have remained bitter political foes.
A White House spokesman in Texas said Washington "will continue to seek freedom" for the people of Cuba.
But Barack Obama, who takes power January 20, has promised to ease some rules limiting travel by and remittances from Cuban-Americans.
Raul Castro repeatedly has said he is ready for talks without "carrot or stick" with Mr Obama.