Russian President Vladimir Putin and the leaders of Crimea have signed a bill to absorb the peninsula into Russia, reported BBC.
The Russian president while addressing a special joint session of parliament, said Crimea had "always been part of Russia" and the move had corrected a "historical injustice".
Crimea was taken over by pro-Russian forces in late February after Ukraine's president was ousted, and declared independence from Ukraine on Monday. Kiev has rejected the peninsula's secession from Ukraine.
The Ukrainian foreign ministry has issued a statement in this regard. The statement said: "We do not recognise and never will recognise the so-called independence or the so-called agreement on Crimea joining the Russian Federation."
On the other hand, US President Barack Obama has invited leaders of the G7 group and the EU to meet next week in The Hague to discuss the crisis.
Meanwhile, Germany and France immediately condemned the Russia-Crimea treaty.
Travel bans and asset freezes have been imposed on government officials and other figures in Russia, Crimea and Ukraine by both US and EU, but these have been largely dismissed as ineffectual in Russia.
In a televised address in front of both houses of parliament and Crimea's new leaders, Putin said: "In the hearts and minds of people, Crimea has always been and remains an inseparable part of Russia." The referendum had been legal and its results were "more than convincing", he said.
The West, he said, had behaved "irresponsibly" in backing the uprising, and dismissed concerns that Russia might go on to annex more of Ukraine.
He also thanked China for what he said was its support during the crisis. Beijing, which routinely avoids commenting on the affairs of other countries, had abstained from voting on a UN draft resolution condemning Russia for its actions in Crimea.
Earlier, Putin had recognised Crimea as a sovereign state and approved a draft bill on its accession to the Russian Federation.
Crimea was transferred from Russia to Ukraine while under Soviet rule in 1954.
The Ukrainian crisis began in November last year after President Viktor Yanukovych abandoned an EU deal in favour of stronger ties with Russia.