"This will be my last term," Castro, 81, told lawmakers after the National Assembly reelected him and named a new regime number two - Council of state vice president Miguel Diaz-Canel, 52.
Choosing the former military man and professor from Villa Clara, who has represented the president on foreign trips in recent months, "marks a final step in configuring the country's future leadership, through the slow and orderly transfer of the main leadership positions to new generations," Castro said.
This is not the transition Cuba's nemesis, the United States, has fruitlessly spent decades and millions of dollars seeking.
Washington has long prodded neighbor Cuba to open up to a multiparty system and market economics, much of the time during the more than 40-year rule of revolution icon Fidel Castro.
Through the Cold War and now for over two decades after it, the United States has kept trying to isolate Cuba to press for democratic change.
It has had a full trade embargo on Havana, the only one-party Communist regime in the Americas, since 1962 to pressure the communist island to open up democratically and economically.
Cuba finally appears poised to have new leadership lined up - if only it can continue to prop up its dysfunctional economy while keeping the regime afloat.
In addition to depending on Venezuelan aid, Cuba has so far failed to discover oil in its waters that experts say lies beneath the seabed off its Gulf of Mexico coast.
The fate and future of the Cuban regime also depends on the health of Venezuelan president Hugo Chavez, Cuba's main economic supporter and political ally, who is recovering from cancer surgery. There is no guarantee a successor would feed Cuba's economy as much as Chavez.
Diaz-Canel, who turns 53 in April, is an electrical engineer by training, a former education minister and the president's de facto political heir seeking to project the Americas' only one-party Communist regime into the future.
Since March, Diaz-Canel has been one of the eight vice presidents on the council of ministers. He took the number two spot from Jose Ramon Machado Ventura, 82, who relinquished the post but remains among Cuba's vice presidents.
Diaz-Canel, as political heir, cuts a starkly different profile from the revolutionary leadership, whose members are mostly in their 80s.
If he comes to lead Cuba, he would be the first leader of the regime whose entire life has been under the Castro regime that started in January 1959.
Barring any changes, Diaz-Canel would succeed Raul Castro, who will be 82 in June, if the president serves out his term through 2018.
A careful speaker, the lanky Diaz-Canel also has been a leader of the Communist Youth Union, and went on an international "mission" to Nicaragua during the first leftist Sandinista government.
He rose up the ranks, leading the party in Villa Clara in central Cuba, before being chosen to lead it in Holguin province in the east. Diaz-Canel was then bumped up to the Politburo in 2003.
There was more new blood among the five vice presidents on the council of state, in the person of Mercedes Lopez Acea, 48, the former leader of the Communist Party's Havana provincial assembly.
Raul Castro became Cuba's interim president when Fidel took ill in 2006. He formally became president in 2008.
The National Assembly, whose members ran for office in October unopposed, also chose Esteban Lazo, 68, as their new speaker. Seen as an ideological hardliner, he is also the regime's most prominent Afro-Cuban leader.
"The choice of Lazo to lead the National Assembly confirms that the approach to any ideological change is a really cautious one. Lazo has been all about ideological orthodoxy," said professor Arturo Lopez-Levy, at the University of Denver in the US state of Colorado.
On Friday, Raul Castro surprised some by joking publicly about resigning.
"I am going to resign. I am about to turn 82. I have the right to retire. Don't you believe me?" Castro said.