Friday's move came in response to a US display in support of imprisoned Cuban dissidents.
Two billboards with photographs of hooded and bloodied inmates at Iraq's Abu Ghraib prison, a swastika and the word "fascists" in bold red letters were placed across the street from the US diplomatic mission, where the display of Christmas lights includes the number 75, in reference to 75 pro-democracy activists imprisoned for lengthy terms last year.
Another billboard faces the back of the building, with large photos of US soldiers searching and pointing a rifle at children, presumably in Iraq.
Washington condemned Cuba for
erecting the billboards
Cuba had demanded this week that the US display at the mission on Havana's busy seaside drive be taken down. The president of the National Assembly, Ricardo Alarcon, called it "rubbish" and "a provocation".
In Washington, Department of State spokesman Richard Boucher said: "Any government that puts up swastikas ought to answer its own questions about why it does that. We think that remembrance of the 75 people in jail is entirely appropriate to the season. And we intend to leave the lights up."
The US diplomat in Cuba said: "The torture at Abu Ghraib has been investigated, reported and discussed fully and openly in the United States. The Cuban government does not allow a single word of dissent in its media and jails those who dare espouse different ideas."
Washington broke off diplomatic relations with Havana and imposed sanctions on Cuba after Fidel Castro's 1959 revolution, but the two countries maintain interests sections in each others' capitals.