The decision appears to give Depardieu – already a frequent guest of the Moscow celebrity circuit – a chance to pay the flat 13 percent income tax levied in Russia on everyone from billionaires to the poor.
"Vladimir Putin has signed a decree granting Russian citizenship to France's Gerard Depardieu," the Kremlin said in a brief statement.
The decree cited an article of the 1993 constitution extending presidents the right to issue citizenship or to grant political asylum.
Depardieu said on Sunday that a decision by France's highest court to strike down the proposed rate on millionaires changed nothing in his highly publicised and much debated decision to move out of France.
The French government has vowed to push ahead with the tax – applicable to anyone who makes more than a million euros ($1.3 million) a year – and propose a new measure that would conform with the constitution.
Putin at his end-of-year press conference in December said he was ready to offer the 64-year-old cinema veteran a Russian passport to resolve the row.
His comments initially generated snickers from reporters. But the Russian strongman quickly made clear that he was entirely serious.
"If Gerard really wants to have a residency permit in Russia or a Russian passport, we can consider this issue resolved positively," Putin said at the time.
The 60-year-old Russian leader referred to Depardieu both as a successful businessman and a friend who loved his country and would therefore be unlikely to leave France for good.
Yet Putin also added that the French prime minister's famous remark about Depardieu being "pathetic' for threatening to leave his country had hurt that star's feelings and may eventually force him to move.
"An artist is easy to offend," Putin remarked.
Depardieu had previously mentioned moving to Belgium – where the tax on millionaires is 50 percent – and had reportedly purchased a new home near the French border for the specific purpose of avoiding the tax.
The hulking actor has been a star in Russia since the Soviet era and still retains cult status among many movie buffs.
France was seen by the USSR as one of Europe's friendlier countries with natural socialist tendencies – a status that made its movies a staple of Soviet silver screens.
He has since grown into a frequent jury member of the glitzy Moscow and Sochi film festivals whose final word on a movie is often treated as gospel.
Depardieu has even been specially invited to take up Russian citizenship by the iron-fisted leader of Chechnya – scene of two brutal post-Soviet wars that claimed tens of thousands of lives.
"I do not plan to discuss his actions, but I can say for sure that we are ready to welcome the great artist," Chechen leader Ramzan Kadyrov said a day before Putin's first remarks on the subject.
A Chechen spokesman said on Thursday that Kadyrov's invitation was still good.
"We confirm: if Depardieu wants to live in the Chechen Republic, this will be received as joyful news," spokesman Alvi Karimov told Moscow Echo radio.
"He will receive all the conditions required for a good life and creative work," the Chechen spokesman said