In a fast-moving sequence of events following Crimea's controversial secession referendum on Sunday, the Kremlin said Crimea was now considered part of Russia and no longer Ukrainian territory, shrugging off strong international objections.
"In the hearts and minds of people, Crimea has always been and remains an inseparable part of Russia," Vladimir Putin said in an emotional address broadcast on television.
The move, which came sooner than expected, risks plunging the West and Russia into a crisis not seen since the Cold War and sent shock waves through the new authorities in Ukraine who took over after the ousting of pro-Kremlin president Viktor Yanukovych last month.
Vladimir Putin signed the treaty with Crimean Prime Minister Sergei Aksyonov and other Crimean leaders at a ceremony at the Kremlin attended by both houses of parliament. Lawmakers, who still have to formally ratify the treaty, broke into applause and cheers after the signing.
"The Republic of Crimea is considered to be part of Russia from the date of the signing of the treaty," the Kremlin said.
Crimea and the city of Sevastopol -- the home of the Russian Black Sea fleet which has special status -- are being incorporated as new constituent parts of the Russian Federation.
The signing -- which had not been flagged in advance came after Vladimir Putin gave a fiery address at the Kremlin seeking to justify the incorporation of Crimea into Russia.
His defiant speech brushed off US and EU sanctions touted as the most severe against Moscow since the end of the Cold War. Vladimir Putin said Crimea belonged with Russia and he slammed the Soviet-era decision by Nikita Khrushchev to gift the peninsula to the Ukrainian Soviet republic as riddled with "violations".
"When Crimea suddenly ended up being in another state, Russia felt it was not simply robbed --- it was plundered."
He added that Russia was tired of being pushed into a corner by the West and said it had been repeatedly deceived on issues like NATO, missile defence and visa-free travel.
"On Ukraine the West crossed a line," he said, warning it against provoking Russia. "They are trying to drive us into a corner."
But he sought to play down fears that Russia was seeking to also incorporate parts of eastern and southern Ukraine. "We don't want the break-up of Ukraine. We do not need it," Vladimir Putin said.
The seizure of Crimea by pro-Russian forces following the ouster of Yanukovych last month has been condemned around the world.