Secretary of State John Kerry met Cuban Foreign Minister Bruno Rodriguez in a Panama City hotel, the latest step toward better ties since President Barack Obama announced a historic shift in Cuba policy on Dec. 17.
The two men talked for at least two hours, sitting across from each other in a restaurant-bar in the hotel fronted by large glass windows. The US government said the meeting went well, Reuters reported.
"Secretary Kerry and Cuban Foreign Minister Rodriguez had a lengthy and very constructive discussion this evening. The two agreed they made progress and that we would continue to work to resolve outstanding issues," a senior State Department official said.
During the talk, Kerry at times gesticulated to Rodriguez with his hands as security officials stood guard outside.
The encounter took place on the eve of the Summit of the Americas in Panama, where Obama and Cuban President Raul Castro will cross paths along with other leaders in the region. The two men are expected to at least shake hands.
Obama appears to be close to removing Cuba from the list of countries that the US government says sponsor terrorism.
The State Department has now recommended that Cuba be taken off the list, a US Senate Foreign Relations Committee aide said earlier on Thursday.
Obama is expected to agree, although it is not clear whether he will announce his decision during the summit.
Cuba's inclusion on the terror list has been a major stumbling block to restoring relations. Reversing it would help ease some financial sanctions against the island and make it easier for US companies to do business there.
A US official said Kerry and Rodriguez sought to smooth the way for Cuba's removal from the list. The United States has pushed for Cuban assurances of no future support for terrorism, and Cuba has responded by making the same demand of Washington.
Obama's decision to move toward restoring full diplomatic ties is a sea change in relations since the Cuban revolution, when US-backed dictator Fulgencio Batista fled the island on Jan. 1, 1959, as Fidel Castro and his revolutionaries seized control.
John Foster Dulles and Gonzalo Guell were the last US and Cuban foreign ministers to hold a formal meeting, in Washington on Sept. 22, 1958, said a US official who spoke on condition of anonymity.
The highest-level meeting after the revolution took place in April 1959, between then-Vice President Richard Nixon and Fidel Castro, who was Cuba's prime minister at the time.
Relations between the United States and Cuba rapidly deteriorated soon after, and the United States broke off diplomatic relations in 1961.
It also imposed a tough trade embargo that Cuba blames for many of its economic problems.
Obama has already relaxed some trade and travel restrictions but only the Republican-controlled Congress can overturn the embargo, and the US president faces fierce opposition from some lawmakers.