Russian President Vladimir Putin has signed a decree which recognises Crimea as a sovereign and independent state.
The Kremlin said the order would take immediate effect.
Putin’s move is being seen as a first step towards integrating the peninsula into the Russian Federation.
It follows the Crimean parliament’s earlier decision to declare independence from Ukraine after the region’s referendum on Sunday.
That saw a massive 97 percent of voters back a break-away from Kyiv.
The European Union, United States and Ukraine have all condemned the ballot as illegal.
In addition to commandeering all Ukrainian state property, Crimea’s leaders declared Ukrainian law invalid.
They also announced they will adopt the Russian rouble, and the clocks will move two hours forward to Moscow time at the end of March.