The decision comes through a presidential decree that was made public on Monday.
American citizen Edward Snowden has chosen to live in Russia since 2013, when he is wanted by American authorities for leaking secret documents.
In 2020, he said he would seek permanent residency in Russia, but would retain his US citizenship.
The announcement of President Putin's decision was published on an official government website.
Snowden was one of 75 foreign citizens of Russia to be granted Russian citizenship by President Putin.
Snowden leaked extensive material about the US intelligence service National Security Agency (NSA) and the information it collected.