While his actions were met with cheers in Crimea and Russia, Ukraine's new government called Putin a threat to the whole world and U.S. Vice President Joe Biden warned that the U.S. and Europe will impose further sanctions against Moscow.
"The world has seen through Russia's actions and has rejected the flawed logic," Biden said as he met with anxious European leaders in Poland.
In an emotional 40-minute speech televised live from the Kremlin's white-and-gold St. George hall, the Russian leader said he was merely restoring order to history by incorporating Crimea.
"In people's hearts and minds, Crimea has always been an integral part of Russia," he declared.
He dismissed Western criticism of Sunday's Crimean referendum - in which residents of the strategic Black Sea peninsula overwhelmingly backed leaving Ukraine and joining Russia - as a manifestation of the West's double standards. Often interrupted by applause, Putin said the rights of ethnic Russians in Ukraine had been abused by the new Ukrainian government and insisted that Crimea's vote to join Russia was in line with international law and reflected its right for self-determination.
Putin said his actions followed what he described as Western arrogance, hypocrisy and pressure, and warned that the West must drop its stubborn refusal to take Russian concerns into account.
"If you push a spring too hard at some point it will spring back," he said, addressing the West. "You always need to remember this."
Crimea had been part of Russia since the 18th century until Soviet leader Nikita Khrushchev transferred it to Ukraine in 1954, a mere formality until the 1991 Soviet breakup. Both Russians and Crimea's majority ethnic Russian population see annexation as correcting a historic insult. Putin argued that today's Ukraine included "regions of Russia's historic south" and was created on a whim by the Bolsheviks.
But despite the massing of thousands of Russian troops on Ukraine's eastern border, Putin insisted his nation had no intentions of invading other regions in Ukraine.
"We don't want a division of Ukraine, we don't need that," he said.
Russia says its troops were on the border just for military training but the U.S. and Europe have called them an intimidation tactic.
Ukraine's political turmoil has become Europe's most severe security crisis since the Balkan wars of the early 1990s and the issue of what NATO does about Ukraine is crucial. Ukrainian officials met with NATO in Brussels on Monday, asking for some technical equipment.
"If Ukraine goes to NATO or the EU, Putin will do everything so that it goes there without the east and south," said Vadim Karasyov, a Kiev-based political analyst. "Putin basically told the West that Russia has the right to veto the way Ukraine will develop. And if not, then Crimea is only a precedent of how pieces of Ukraine can be chopped off one by one."
Putin argued that the months of protests in the Ukrainian capital of Kiev which prompted President Viktor Yanukovych to flee to Russia had been instigated by the West to weaken Russia. He cast the new Ukrainian government as illegitimate, driven by radical "nationalists, neo-Nazis, Russophobes and anti-Semites."
In response, Ukraine's new government called Putin dangerous.
"Today's statement by Putin showed in high relief what a real threat Russia is for the civilized world and international security," Ukrainian Foreign Ministry spokesman Evhen Perebinis said on Twitter. "(The annexation) has nothing to do with law or with democracy or sensible thinking."
Displaying strong emotion, Putin accused the West of cheating Russia and ignoring its interests in the years that followed the 1991 Soviet collapse.
"They have constantly tried to drive us into a corner for our independent stance, for defending it, for calling things by their proper names and not being hypocritical," Putin said. "But there are limits. And in the case of Ukraine, our Western partners have crossed a line. They have behaved rudely, irresponsibly and unprofessionally."
Following the speech before lawmakers and top officials, Putin and Crimean officials signed a treaty for the region to join Russia.
The treaty will have to be endorsed by Russia's Constitutional Court and ratified by both houses of parliament, but Valentina Matviyenko, the speaker of upper house of Russian parliament, said the procedure could be completed by the end of the week.
The hastily called Crimean vote was held just two weeks after Russian troops had overtaken the Black Sea peninsula, blockading Ukrainian soldiers at their bases. The West and Ukraine described the referendum as illegitimate and being held at gunpoint, but residents on the peninsula voted overwhelmingly to join Russia.
To back his statement that Crimea's vote was valid, Putin pointed to Kosovo's independence bid from Serbia - a move supported by the West and opposed by Russia - and said Crimea's secession from Ukraine repeated Ukraine's own secession from the Soviet Union.
He denied Western accusations that Russian troops had invaded Crimea prior to the referendum, saying a treaty with Ukraine allows Russia to have up to 25,000 troops at its Black Sea Fleet base in Crimea.
Putin declared that the Soviet collapse made Russians "the largest divided people in the world."
"I have heard residents of Crimea say that back in 1991 they were handed over like a sack of potatoes," he said. "What about Russia? It lowered its head and accepted the situation, swallowing the insult. Our country was going through such hard times then that it simply was incapable of defending its interests."
Speaking in Donetsk, the center of the Donbass coal-mining region in eastern Ukraine, 37-year-old businessman Aleksei Gavrilov hailed Crimea joining Russia and said Donbass also historically belonged to Russia.
"Ukraine is just a made-up, fake project which was created to destroy Russia," he said. "Everything that Putin said is perfectly correct and I support him completely!"
Igor Nosenko, a bar manager, watched Putin's speech in Kiev.
"It seems that I am in some kind of surrealist world when a person is saying that white is black," he said. "It can be dangerous for the whole world, since it is absolutely unclear what this person (Putin) has in his head."
The United States and the European Union announced asset freezes and other sanctions Monday against Russian and Ukrainian officials involved in the Crimean crisis. President Barack Obama warned that more would come if Russia didn't stop interfering in Ukraine.
France's Foreign Minister Laurent Fabius told Europe-1 radio that leaders of the Group of Eight world powers "decided to suspend Russia's participation."
But Putin made it clear in his speech that Russia wouldn't be deterred by Western sanctions, and asked China and India for their support.
The Russian State Duma, the lower chamber of parliament, on Tuesday unanimously passed a resolution condemning U.S. sanctions targeting Russian officials. The chamber challenged Obama to extend the sanctions to all the 353 deputies who voted for Tuesday's resolution, suggesting that being targeted was a badge of honor. Eighty-eight deputies left the house before the vote.
Many in Crimea's ethnic Tatar minority were wary of the referendum, fearing that Crimea's break-off from Ukraine will set off violence against them. Soviet authorities had forcibly evicted the Muslim Tatars from Crimea decades ago.
Crimean Deputy Prime Minister Rustam Temirgaliyev seemed to confirm those fears, telling the RIA Novosti news agency that the government would ask Tatars to "vacate" some of the lands they "illegally" occupy so authorities can use them for "social needs."
But Putin on Tuesday vowed to protect the rights of the Crimean Tatars and keep their language as one of Crimea's official tongues, along with Russian and Ukrainian.
Jim Heintz and Maria Danilova in Kiev, Angela Charlton in Paris and Nataliya Vasilyeva in Moscow contributed to this report.