Dmitry Medvedev has paid the first visit by a Russian president to the disputed Kuril Islands, sparking a diplomatic row with Japan.
Mr Medvedev met local residents in Kunashir, the second-largest of the four islands, and pledged more investment for the region.
Japanese Prime Minister Naoto Kan called Mr Medvedev's visit regrettable, and Russia's envoy was summoned.
Russia called Japan's reaction to the visit "unacceptable".
Russia took control of the islands at the end of World War II.
The islands lie to the north of Japan's Hokkaido island and to the south of Russia's Kamchatka peninsula. They are known in Russia as the Southern Kurils, while Japan calls them the Northern Territories.
Before Russia took control of them, some 17,000 Japanese residents lived in the Kurils.
Mr Medvedev is the first Russian leader to set foot on the islands.
In Kunashir, known in Japan as Kunashiri, he visited a kindergarten, a power station and a fishery, and promised greater investment in the region.
"We have an interest in people remaining here. It is important that there be development here, we will invest money here without fail," Interfax news agency quoted him as saying.
In Tokyo, Mr Kan reiterated Japan's stance on the islands.
"Those four northern islands are part of our country's territory, so the president's visit is very regrettable," he said.
Separately, Japanese Foreign Minister Seiji Maehara warned that the visit would "hurt the feelings of the Japanese people".
But Russia's top diplomat, Sergei Lavrov, condemned Japan's reaction as "unacceptable".
"It is our land and the Russian president visited Russian land," the foreign minister said. Japan's ambassador would be summoned to hear Russia's position, he added.
The dispute has strained relations between Tokyo and Moscow ever since World War II, preventing the signing of a formal peace treaty.
The islands have rich fishing grounds, mineral deposits and possibly oil and gas reserves.
Mr Medvedev's visit comes shortly before his planned trip to Japan for an Asia-Pacific Economic Co-operation (Apec) meeting in mid-November.
It also comes with Japan locked in a separate territorial dispute with another of its powerful neighbours.
Ties between China and Japan have been strained by a row over islands in the East China Sea - known as Senkaku in Japan and Diaoyu in China - that both claim.