Prime Minister Stephen Harper has ordered the suspension of all joint military activities between Canada and Russia.
That includes joint anti-terrorism drills involving Canadian and Russian air forces as well as scheduled meetings.
Harper says Canada views the situation in Ukraine with the "gravest concern."
He adds Canada will review its relations with Russian President Vladimir Putin's government "accordingly."
The move comes the day after the House of Commons unanimously passed a motion condemning Russia's dramatic incursion in the country, which has been riven by protests for months.
Putin, meanwhile, lashed out at possible sanctions against his country by the United States and the European Union and accused the West of sowing divisions within Ukraine.