Putin signed the treaty with Crimean Prime Minister Sergei Aksyonov and other Crimean leaders after addressing both houses of parliament, as well as heads of Russian regions and representatives of public organizations at a special assembly in the Kremlin.
The Russian parliament is expected to ratify the treaty imminently.
Putin signed a decree Monday recognizing Crimea as an independent state, following a referendum Sunday that saw voters on the peninsula overwhelmingly support secession and reunification with Russia.
In his address, punctuated by loud applause, the Russian leader justified Moscow’s decision to protect Crimea, saying Russia’s inaction would have been regarded as treason.
"The residents of Crimea and Sevastopol turned to Russia with a request to protect their rights and their lives. We could not have rejected their appeal and left them in trouble,” Putin said.
Putin criticized the West for its containment policy against Moscow which he said has been conducted throughout history, particularly during the Cold War, and is continuing unabated.
"They always try to drive us into a corner for our independent stance, for our move to defend it and for calling a spade a spade, without showing a false face,” Putin said.
Putin said Russia’s Western partners crossed the line when dealing with events in Ukraine, while ignoring the fact that Crimea is home to a predominantly Russian ethnic majority.
"Russia found itself on the brink, from that point it could not have retreated,” the president said.
He also called the gift of Crimea to Ukraine by Soviet leaders in 1954 a "robbery” and said the Black Sea peninsula has always remained an inseparable part of Russia in the hearts and minds of Russians.
Putin praised the results of Sunday’s referendum in Crimea which he said was held "openly and fairly.”
"Crimeans clearly voiced their will. They want to be united with Russia,” he said.
The Russian leader’s address was good news for Russia’s ruble Tuesday, which rose to 36.30 to the dollar and 50.54 to the euro after falling to a historic low earlier this month.
Crimea and the city of Sevastopol, which is to have a special status within the republic, are to be considered Russian territory as of Tuesday, the Kremlin said, adding that the transition period for the breakaway region’s fully joining Russia will last until 2015.
Crimea will have three official languages: Russian, Ukrainian and Crimean Tatar.