Moscow's Lefortovo district court has ordered Wall Street Journal reporter Evan Gershkovich to be held in pre-trial detention until 29 May.
Mr Gershkovich was arrested in Russia on charges of spying for Washington. He told the court that he was not guilty of the charge.
The announcement marks a serious escalation in Kremlin efforts to silence perceived critics, a crackdown that gained momentum following Russia's military operation in Ukraine last year.
The FSB security services said they had "halted the illegal activities of US citizen Evan Geshkovich", saying the Wall Street Journal reporter was "suspected of spying in the interests of the American government".
The Wall Street Journal said it was "deeply concerned for the safety of Mr Gershkovich" and the international media watchdog Reporters Without Borders (RSF) said it was "alarmed by what looks like retaliation".
Russian Deputy Foreign Minister Sergei Ryabkov said it was too early to talk of a possible prisoner swap.
The Interfax news agency cited Mr Ryabkov as saying that such exchanges had previously taken place for those already convicted, and that it was necessary to wait to see how the story with Mr Gershkovich developed.
RSF said Mr Gershkovich "was investigating on the military company Wagner" - a mercenary group playing a prominent role in Russia's campaign in Ukraine.
The FSB statement confirmed that Mr Gershkovich, 31, was working with press accreditation issued by the Russian foreign ministry.
But the statement said he had been detained for gathering information "on an enterprise of the Russian military-industrial complex".
"The foreigner was detained in Yekaterinburg while attempting to obtain classified information," the FSB said, referring to a city in central Russia 1,800km east of Moscow.
Russia's foreign ministry spokeswoman Maria Zakharova alleged that Mr Gershkovich had been "caught red handed".
The Kremlin has also warned the United States against taking retaliatory measures targeting Russian media.
"We are hoping that it will not happen and it must not happen," Kremlin spokesman Dmitry Peskov told reporters, referring to any possible steps against Russian media in the US.
Before joining The Wall Street Journal Mr Gershkovich worked for AFP in Moscow.
A fluent Russian speaker, he was previously a reporter based in the Russian capital for The Moscow Times, an English-language news website.
His family emigrated from Russia to the US when he was a child.
Media crackdown
"The problem is ... the fact that the way the FSB interprets espionage today means that anyone who is simply interested in military affairs can be imprisoned for 20 years," Russian political analyst Tatiana Stanovaya said on social media in response to the detention.
Several US citizens are currently in detention in Russia and both Washington and Moscow have accused the other of carrying out politically-motivated arrests.
The FSB in January opened a criminal case against a US citizen it said was suspected of espionage but did not name the individual.
He is detained in a penal colony south of Moscow. The US said he was a private citizen visiting Moscow on personal business and has demanded his release.
There have been several high-profile prisoner exchanges between Moscow and Washington over the past year.
Russian authorities have also used espionage charges against Russian journalists.
Last year, Russia jailed a respected defence reporter, Ivan Safronov, for 22 years on treason charges.
Mr Safronov worked for business newspaper Kommersant and was one of Russia's most prominent journalists covering defence.
Mr Gershkovich's arrest comes as Western journalists in Russia face increasing restrictions.
Staff of Western media outlets often report being tailed, particularly during trips outside of major urban hubs of Moscow and Saint Petersburg.
Many Russians fear speaking to foreign media, due to strict censorship laws adopted in the wake of the Ukraine offensive.
A US diplomatic source said the US Embassy had not been informed about the incident and was seeking information from the Russian authorities about the case.
Other foreign journalists covering Russia expressed support for Gershkovich online, saying he was a professional journalist, not a spy.
Andrei Soldatov, an author and expert in Russia's security agencies who is outside the country, said on social media: "Evan Gershkovich is a very good and brave journalist, not a spy, for Christ's sake.
"It (his detention) is a frontal attack on all foreign correspondents who still work in Russia. And it means that the FSB is off the leash."
Kommersant newspaper reported that Mr Gershkovich would be transported to Moscow and held in the capital's Lefortovo prison, an FSB pre-trial detention facility.
Mr Gershkovich's mobile phone could not be reached today and according to the Telegram messenger service, he was last online yesterday at 1.28pm Moscow time.
