Castro, 81, who has not appeared in public since undergoing stomach surgery almost 19 months ago, said he would not seek a new term as president or leader of Cuba's armed forces when the National Assembly meets on Sunday. ''To my dear compatriots, who gave me the immense honor in recent days of electing me a member of parliament ... I communicate to you that I will not aspire to or accept -- I repeat not aspire to or accept -- the positions of president of the Council of State and commander-in-chief,'' Castro said in a statement published in the Communist Party's Granma newspaper.
US President George W Bush, who has tightened a decades-old economic embargo against Castro's government, said he hoped Castro's retirement would mark a new era in Cuba.
''I believe that the change from Fidel Castro ought to begin a period of a democratic transition,'' Bush said in Rwanda during a tour to Africa. ''Eventually this transition ought to lead to free and fair elections. And I mean free and I mean fair.'' Cuba's National Assembly, a rubber-stamp legislature, is expected to nominate Castro's brother and designated successor Raul Castro as president. The 76-year-old defence minister has been running the country since emergency intestinal surgery forced his brother to delegate power on July 31, 2006.
Raul Castro has raised hopes of economic reforms but he is unlikely to make bold political changes to the one-party state.
Fidel Castro will remain influential as first secretary of the ruling Communist Party.
''This is a crucial moment. Cuba wants change, the people ant change,'' said Oswaldo Paya, Cuba's best-known dissident.
He said a succession headed by Raul Castro would not satisfy Cubans and called for an end to censorship.
Cubans on the empty streets of Havana were not surprised by Castro's retirement, first announced on Granma's Web site in the middle of the night.
''Everyone knew for a while that he would not come back. The people got used to his absence,'' said Roberto, a self-employed Cuban who did not want to be fully named.
''I don't know what to say. I just want to leave. This system cannot continue,'' said Alexis, a garbage collector.
In a deserted Revolution Square, the site of many hours-long speeches by Castro to massive crowds, a lone soldier stood guard at government headquarters. The city was calm.