The Illinois senator said the restrictions, imposed in 2004, isolated the communist island from "the transformative message carried there by Cuban Americans." He promised to grant Cuban exiles unrestricted rights to visit their families and to send remittances home.
"The primary means we have of encouraging positive change in Cuba today is to help the Cuban people become less dependent on the Castro regime in fundamental ways," Obama wrote in an op-ed piece published in The Miami Herald.
"Unfortunately, the Bush administration has made grand gestures to that end while strategically blundering when it comes to actually advancing the cause of freedom and democracy in Cuba," he added.
While the U.S. embargo has limited who can travel to Cuba and what can be sent there since the early 1960s, Bush's restrictions made visiting and shipping gifts to Cuba more difficult.
Now most Cuban-Americans can only visit the island once every three years and can only send quarterly remittances of up to $300 per household to immediate family members. Previously, they could visit once a year and send up to $3,000. The U.S. also tightened restrictions on travel for educational and religious groups.
The Cuban-exile vote is considered key to winning Florida, and top presidential candidates have generally followed the recommendations of the community's most hard-line and vocal leaders, who support a full embargo against Fidel Castro's government. Castro, 80, is in poor health and turned over temporary power last year to his brother Raul.
But sentiment in the Cuban-American community is changing. Unlike the early waves of immigrants who brought their entire family, often by plane, to the U.S., most Cubans now flee by boat and are forced to leave relatives behind. Fewer of these immigrants were overt political opponents of the government, and they want to be able to visit loved ones and to send money home.
Many Cuban exiles are also frustrated with the U.S. embargo, which has failed to yield fruit after nearly 45 years. And with the specter of an ailing Castro and a possible change in leadership, they are more open to changing U.S. policy.
Along with lifting the travel and money restrictions, Obama said he would use aggressive diplomacy to encourage a post-Fidel Castro government to institute democratic reforms but did not discount a dialogue with Raul Castro — another break from the Bush administration that has said both Castros must go.
Joe Garcia, the group's chairman, praised Obama's proposal.
"It shows courage, and it shows commitment to move beyond the status-quo politics of rhetoric, which is all the Cuban-American community has received from any party for the last half century," said Garcia, a former head of the Cuban American National Foundation, a leading exile group.
No other current top presidential candidate has sought to ease the restrictions.
In May, Democratic rival Hillary Clinton said she opposed immediate changes in Cuba travel but added that there may be need for change in the next presidency if Castro is no longer in power.
Such a change would be contingent on commitments to human rights and more openness from the Cuban government, the U.S. senator from New York said.
Clinton must contend with her husband's legacy on U.S.-Cuba relations, particularly when his administration authorized U.S. agents to return young Elian Gonzalez to his father in Cuba — alienating many exiles.
Mauricio Claver-Carone, head of the U.S.-Cuba Democracy Political Action Committee, which supports full sanctions, said such a statement hurt U.S.-Cuban relations at a crucial time.
"I'm sure he's well intentioned," Claver-Carone said but added that with the death of Castro possibly approaching and the potential for change on the island, such a statement could send the wrong message.
"It entrenches the regime at this historic time," Claver-Carone said.
Obama's comments mark his latest in a string of foreign policy statements made in an effort to set himself apart from the Democratic pack and dispel criticism that he lacks international experience.
In a presidential debate in South Carolina in July, Obama said he would be willing to meet in his first year as president with leaders of Iran, Syria, Venezuela, North Korea and Cuba, citing talks between Presidents John F. Kennedy and Ronald Reagan with Soviet leaders during the Cold War. Clinton called that "irresponsible and frankly naive."