The Group of Seven has warned Russia of massive consequences and severe costs if President Vladimir Putin attacks Ukraine, according to a draft statement.
US intelligence assesses that Russia could be planning a multi-front offensive on Ukraine as early as next year, involving up to 175,000 troops.
The Kremlin denies it plans to invade and says the West is gripped by Russophobia.
Moscow says the expansion of NATO threatens Russia and has contravened assurances given to it as the Soviet Union collapsed in 1991.
At a meeting in the northern English city Liverpool, the G7 delegates said they were united in their condemnation of Russia's military build-up near Ukraine and they called on Moscow to de-escalate.
"Russia should be in no doubt that further military aggression against Ukraine would have massive consequences and severe cost," the draft statement said, confirmed by G7 sources.
"We reaffirm our unwavering commitment to Ukraine's sovereignty and territorial integrity, as well as the right of any sovereign state to determine its own future," the draft said.
For Moscow, the growing NATO embrace of a neighbouring former Soviet republic - and what it sees as the nightmare possibility of alliance missiles in Ukraine targeted against Russia - is a "red line" it will not allow to be crossed.
Mr Putin has demanded legally binding security guarantees that NATO will not expand further east or place its weapons close to Russian territory; Washington has repeatedly said no country can veto Ukraine's NATO hopes.
In 2014, Russia seized the Black Sea peninsula of Crimea from Ukraine, prompting the West to slap sanctions on Russia.
The Kremlin said today that Mr Putin told US President Joe Biden that Russian troops posed no threat and that Moscow was being demonised for moving troops around its own territory.
Kremlin spokesman Dmitry Peskov said there were very serious conceptual differences between Russia and the United States on Moscow's "red lines".
The G7 comprises Britain, France, Germany, Italy, Japan, Canada and the United States, and includes a representative from the European Union.
"We call on Russia to de-escalate, pursue diplomatic channels and abide by its international commitments on transparency of military activities," the G7 said in the draft.
"We reconfirm our support for the efforts of France and Germany in the Normandy Format to achieve full implementation of the Minsk Agreements in order to resolve the conflict in eastern Ukraine," the draft said.
China's Xi and Russia's Putin dominate the G7
Pope calls for 'serious international dialogue' to defuse Ukraine tensions
Pope Francis, in his first comments on the tensions between the West and Russia over Ukraine, today called for serious international dialogue to resolve tensions and urged both sides to avoid an armed conflict.
He said he was praying for "dear Ukraine, for all its churches and religious communities and for all of its people, so that tensions there are resolved through a serious international dialogue and not with weapons".
"Weapons are not the path to take. May this Christmas bring peace to Ukraine," the pope told thousands of people in St Peter's Square for his noon blessing and address.
Ukraine is predominantly Orthodox Christian, with Catholics of either the Latin Rite or Byzantine rite making up about 10% of the population in the former Soviet republic.
Biden issues warning to Russia over Ukraine
Separately, Mr Biden has said he told Mr Putin that Russia would pay "a terrible price" and face devastating economic consequences if it invaded Ukraine.
Mr Biden told reporters the possibility of sending US ground combat troops to Ukraine in the event of a Russian invasion was "never on the table," although the United States and NATO would be required to send in more forces to eastern flank NATO countries to beef up their defences.
"I made it absolutely clear to President Putin ...that if he moves on Ukraine, the economic consequences for his economy are going to be devastating, devastating," he said after remarks about the deadly tornadoes that hit the United States on Friday.
Mr Biden, who spoke with Mr Putin by telephone for two hours last week, said he had made clear to the Russian leader that Russia's standing in the world would change "markedly" in the event of an incursion into Ukraine.
