Russian President Vladimir Putin has signed a decree recognising Crimea as a sovereign state.
It comes after the Ukrainian region declared itself independent and applied to join Russia following a weekend referendum.
The decree posted on the Kremlin's website appeared to be a first step towards integrating Crimea as a part of the Russian Federation.
The decree, which took effect immediately, says Moscow's recognition of Crimea as independent is based on "the will of the people of Crimea".
Crimea's leaders declared a 97% result in favour of seceding from Ukraine in a vote condemned as illegal by Kiev and the West.
The Crimean parliament formally proposed that Russia "admit the Republic of Crimea as a new subject with the status of a republic".
Mr Putin will address the issue at a special joint session of the Russian parliament tomorrow.
The United States and the European Union earlier imposed sanctions, including asset freezes and travel bans, on a small group of officials from Russia and Ukraine.
Russian forces took control of Crimea in late February following the toppling of Ukrainian president Viktor Yanukovych.
There had been deadly clashes between riot police and protesters who tried to overturn Mr Yanukovych's decision to reject a trade and cooperation deal with the EU and seek closer ties with Russia.
US President Barack Obama imposed sanctions on 11 Russians and Ukrainians blamed for the military seizure, including Mr Yanukovych, and Vladislav Surkov and Sergei Glazyev, two aides to Mr Putin.
Mr Putin himself was not on the blacklist.
Amid fears that Russia might move into eastern Ukraine, Mr Obama warned Moscow at a White House press briefing that what he called further provocations would only increase Russia's isolation and exact a greater toll on its economy.
"If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions," he said.
A senior US official said Mr Obama's order cleared the way to sanction people associated with the arms industry and targets "the personal wealth of cronies" of the Russian leadership.
In Brussels, the EU's 28 foreign ministers agreed to subject 21 Russian and Ukrainian officials to visa restrictions and asset freezes for their roles in the events.
The EU did not immediately publish the names.
Minister for European Affairs Paschal Donohoe represented Ireland at today's meeting in Brussels.
He said the EU meeting also condemned Russia's veto of a UN Security Council Draft Resolution on Saturday.
He added: "The decision to temporarily remove customs duties on Ukrainian exports to the EU was also sanctioned. This will further bolster Ukraine and demonstrates a commitment on behalf of the EU to seek ways to economically support Ukraine during this time."
Washington and Brussels said more measures could follow in the coming days if Russia does not back down and formally annexes Crimea.
A senior Obama administration official said there was "concrete evidence" that some ballots in the Crimea referendum arrived in some Crimean cities pre-marked.
Russian Deputy Prime Minister Dmitry Rogozin, who was named on the White House sanctions list, suggested that the measures would not affect those without assets abroad.
US and EU response 'crucial'
The Ukrainian Ambassador to Ireland has said the response from the EU and the United States to the disputed referendum could be crucial in preventing the conflict in Ukraine spreading elsewhere.
Speaking on RTÉ's Morning Ireland, Sergei Reva said the US and the EU response to the referendum would be important as aggressive actions from Russia in Crimea could put the world on the brink of what he termed as "a new Cold War".
"The response from Brussels, the response from other Western countries is very ... crucial, because all Europe and all the world is now in very dangerous situation."
Mr Reva said he believed Russia's aggression in Crimea should not be tolerated in the 21st century.
He accused Russia of trying to spark an anti-Ukrainian movement in the eastern part of Ukraine, and not just in Crimea.
Any talk of a truce between pro-Moscow and pro-Kiev troops in Crimea would be welcome due to the continued risk of military conflict there, he said.
Responding to Mr Reva's comments, the Russian Ambassador to Ireland insisted that the referendum was "completely legal".
Maxim Peshkov said that more than 85% of the population had taken part in the vote; the vast majority of whom wished to rejoin the Russian Federation.
Mr Peshkov claimed that any sanctions imposed upon Moscow would be a doubled-edged sword, and equally painful for Europe and the US.
The ambassador said that while Russia, the EU and the US were partners in trade, economics, and diplomacy, Moscow also had strong links with other countries around the world.
Mr Peshkov said that Russia's military base in Crimea was "legal and legitimate" and that pro-Russian forces in the region were not being boosted by additional troops being sent from Moscow.