"Against the will of the government in Kiev, Crimea was annexed. Russia poured arms into Eastern Ukraine, fuelling violent separatists and a conflict that has killed thousands. When a civilian airliner was shot down from areas that these proxies controlled, they refused to allow access to the crash for days," Obama said at the UN General Assembly.
Cautioning that this reflects a vision of the world in which "might makes right", Obama said, "America stands for something different. We believe that right makes might - that bigger nations should not be able to bully smaller ones; that people should be able to choose their own future."
Warning Russia of the costs involved in the aggression, he said: "We will reinforce our NATO allies, and uphold our commitment to collective defence. We will impose a cost on Russia for aggression, and counter falsehoods with the truth."
Terming the recent truce deal in Ukraine offers as an opening towards diplomacy and peace, Obama added: "If Russia takes that path -- a path that for stretches of the post-Cold War period resulted in prosperity for the Russian people -- then we will lift our sanctions and welcome Russia's role in addressing common challenges."
After President Viktor Yanukovych fled, Russia intervention led to secession of Crimea and its merger with Moscow. The civil war between pro-Russian separatist and government forces is still raging.
As Obama spoke, Russian Foreign Minister Sergei Lavrov sat in the audience, staring down at a stack of papers without glancing up at Obama.