Mikhail Gorbachev has accused Vladimir Putin of "castrating" Russia's electoral system and said he should not seek re-election as president.
The ex-Soviet leader was interviewed by the BBC's Bridget Kendall on the eve of the 20th anniversary of the failed coup which led to the collapse of the USSR.
The action was aimed at reversing reforms overseen by Mr Gorbachev.
Mr Putin, the current prime minister, radically changed the voting system during his two terms as president.
He is widely tipped to stand again in 2012 and previously won landslide victories in 2000 and 2004.
Mr Gorbachev, 80, the Soviet Union's first and last unelected president, stood for election as Russian president in 1996, when he took less than 1% of the vote against his old foe, Boris Yeltsin.
He remains dismissive of the hardline plotters who tried to depose him in 1991 but is anxious about where Russia is heading now, the BBC's diplomatic correspondent reports.
He told the BBC that in the last two decades the country should have got further along the road towards democracy.
He laid much of the blame on Mr Putin who, in the view of many, remains the real power in the land.
"Putin and his team are for stability but stability kills development and results in stagnation," Mr Gorbachev said.
"The electoral system we had was nothing remarkable but they have literally castrated it."
While president, Mr Putin drastically reformed the electoral system to effectively exclude independent candidates and smaller parties from parliament, and centralise control of the regions.
Mr Gorbachev acknowledged the Putin years had seen some achievements but said he did not think Mr Putin should stand again next year, as it was time for a change.
He said the next five or six years would be crucial and, if Russia missed this window and failed to modernise and become more democratic, it would forever lag behind.
Barred by the constitution from serving three consecutive terms, Mr Putin stood down as president in 2008 to allow his protege, Dmitry Medvedev, to be elected.
Mr Putin, who once described the collapse of the USSR as "the greatest geopolitical catastrophe of the 20th Century", congratulated Mr Gorbachev on his 80th birthday in March with a telegram.
He praised him as "one of the great statesmen of modern times, who have made a significant impact on the course of world history".