Russia has resumed a military build-up near Ukraine, Nato secretary general Anders Fogh Rasmussen said.
He criticised the move as “a very regrettable step backward”.
Mr Rasmussen said: “I can confirm that we now see a new Russian military build-up – at least a few thousand more Russian troops deployed to the Ukrainian border, and we see troop manoeuvres in the neighbourhood of Ukraine.”
He added: “If they’re deployed to seal the border and stop the flow of weapons and fighters, that would be a positive step. But that’s not what we’re seeing.”
Instead, the Nato chief said Russia appears bent on using its military to intimidate Ukraine further.
“It seems that Russia keeps the option to intervene further,” Mr Rasmussen said.
“So the international community would have to respond firmly if Russia were to intervene further. That would imply deeper sanctions, which would have a negative impact on Russia.”
Nato estimated that at one point there were up to 40,000 Russian forces deployed near the border with Ukraine, but reported last month that many of the soldiers had been pulled back.
Mr Rasmussen spoke out as US Treasury Secretary Jacob Lew made clear that Moscow will face further punishment if it keeps backing anti-government militants.
The US and European Union have imposed sanctions on some Russian officials but stopped short of fully fledged economic sanctions.
Mr Lew stressed the importance of US-European co-ordination after meeting German finance minister Wolfgang Schaeuble.
He said “Russia has a fundamental choice to make” and must support a peace plan rather than continuing support for separatists in Ukraine and allowing weapons to cross the border.
“Russia has to understand that if it goes the other way, there will have to be additional consequences,” he added.
On Wednesday Ukrainian President Petro Poroshenko proposed a unilateral ceasefire by his troops to allow pro-Russian separatists in the east a chance to lay down weapons or leave the country, according to reports.