Russia sent tanks and troops to help assert its authority over Crimea
Nato defence ministers are due to discuss for the first time the long-term security implications of Russian actions over Ukraine.
The talks in Brussels will also focus on what action Nato member states should take in response.
Relations between Nato and Moscow plummeted after Russia's annexation of the Crimean peninsula in March.
On Monday, Russia's envoy to the bloc threatened to end a long-standing co-operation treaty with Nato.
A senior Nato official quoted by the AFP news agency said defence ministers would be making "fundamental decisions" regarding Russia that would go before Nato leaders at a September summit in the UK.
Officials said there had been a "frank exchange of views" with the Russian Ambassador to Nato, Alexander Grushko, on Monday.
Nato member states "repeated their very strong and clear position on the illegal and illegitimate annexation" of Crimea, alliance spokeswoman Oana Lungescu said.
"They made clear that they would not recognise it, they commended the elections in Ukraine as a clear vote for the unity of Ukraine and called on Russia to engage constructively with the newly elected president," she said.
Nato also called on Russia "to respect its international commitments, to stop the flow of arms and weapons across the border, to stop supporting armed separatists in Ukraine", she added.
Mr Grushko later told Russian Interfax news agency that Moscow might pull out of the Founding Act - a co-operation treaty - with Nato and take "measures of a military character" if there were major deployments in eastern and central Europe.
"We shall wait and see what the ministers decide," he said.
"But if it means additional deployment of substantial Nato military assets in central and eastern Europe, and we are hearing calls for just that, then even if it takes place as a troops rotation we will have difficulty viewing it as anything other than a direct breach of obligations in the fundamental Russia-Nato documents including the Founding Act."
He added: "All this could cast Europe back to the days of the Cold War and launch an arms race."
Kiev and the West have accused Russia of stirring up separatist sentiment in parts of eastern Ukraine where the majority are Russian-speaking.
Russia, which denies the claims, is seeking an emergency meeting of the UN Security Council to call for an immediate end to fighting in east Ukraine.
On Monday, hundreds of heavily-armed insurgents resumed a sustained assault on a border guards' command post near the city of Luhansk.
Nato ministers, who are holding two days of talks in Brussels, will also discuss the end of the combat mission in Afghanistan and US plans to train and advise Afghan forces after 2014.
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