The moves triggered the toughest Western sanctions against Russia since the Cold War with Washington and the European Union retaliating with asset freezes and travel bans and US President Barack Obama vowing to "increase the cost" if the Kremlin does not back down.
Ukraine's turmoil has become Europe's most severe security crisis in years and tensions have been high since Russian troops seized control of Crimea, which decided in a Sunday referendum to merge with Russia. Putin signed a decree recognizing Crimea's independence, and Russian troops were massed near the border with Russian-speaking eastern Ukraine.
Ukraine's acting president raised tensions on the ground by calling for the activation of some 20,000 military reservists and volunteers across the country and for the mobilization of another 20,000 in the recently formed National Guard.
In the Crimean capital of Simferopol, ethnic Russians applauded the Sunday referendum that overwhelmingly called for secession and for joining Russia. Masked men in body armor blocked access for most journalists to the parliament session that declared independence, but the city otherwise appeared to go about its business normally.
The US, EU and Ukraine's new government do not recognize the referendum held Sunday in Crimea, which was called hastily as Ukraine's political crisis deepened with the ouster of pro-Russia President Viktor Yanukovych following months of protests and sporadic bloodshed. In addition to calling the vote itself illegal, the Obama administration said there were "massive anomalies" in balloting that returned a 97 percent "yes" vote for joining Russia.
Obama warned that Russia could face more financial punishment.