Russian President Vladimir Putin and Crimean Prime Minister Sergei Aksyonov have signed a landmark treaty that incorporates the Black Sea peninsula into the Russian Federation, amid reports of a Ukraine soldier being killed in the troubled area.
The signing follows the disputed 16 March referendum held in the predominantly ethnic-Russian region, which voters overwhelmingly backed in splitting from Ukraine.
In an address to a joint session of the Russian parliament in the Kremlin, Putin said Crimea remains an inseparable part of Russia.
"Crimeans clearly voiced their will," Putin said. "They want to be united with Russia."
According to the terms of the treaty, the city of Sevastopol will be given a special status within the republic, and Crimea will have three official languages, namely Russian, Ukrainian and Crimean Tatar, RIA Novosti reports.
The Russian Parliament is expected to ratify the treaty imminently, while the transition period for the Ukrainian breakaway region's fully joining Russia will last until 2015.
Ukraine and the Western countries have condemned the treaty, calling it a 'seizure' of Crimea by Moscow.
The Ukrainian Foreign Ministry said in a statement: "We do not recognise and never will recognise the so-called independence or the so-called agreement on Crimea joining the Russian Federation."
Soon after the signing, the Ukrainian defence ministry announced that a Ukrainian soldier had been killed, while another was injured in an attack on a military base in the Crimean capital of Simferopol that was stormed by Pro-Russian forces.
The ministry subsequently authorised its soldiers to use weapons for self-defence in Crimea.
A defence ministry order issued after the incident said: "In connection with the death of a Ukrainian serviceman... Ukrainian troops in Crimea have been allowed to use weapons to defend and protect the lives of Ukrainian servicemen."