The banner, declaring Freedom for the May 6 prisoners!, rippled over three floors at the top of a high-rise apartment block on Novy Arbat, one of Moscow's busiest streets. It was quickly taken down and one man was arrested.
The gesture of defiance was a muted prelude to a planned evening rally on the Moscow square where, a year ago, baton-wielding riot police broke up a protest against Putin on the eve of his inauguration. Hundreds were detained.
Opposition activists also plastered the names of protesters awaiting trial for last years rally across street signs in the Yekaterinburg, in a twist on the tradition of honouring heroes by naming streets after them.
Putins critics saw the use of force and the threat of jail sentences as a shift towards intimidation and repression and a turning point in the Kremlins tactics against the opposition.
The GULAG again in Russia said Gennady Gudkov, a former member of parliament, drawing comparisons between Putin and the methods used by Soviet dictator Josef Stalin, who sent millions to their death in labour camps.
The opposition hope to win back the tens of thousands who protested against Putin early last year.The opposition has lost many of its mainly young, urban and middle-class supporters.