Putin, a former KGB agent, greeted Snowden as a fellow "former agent" before assuring him that Russia's surveillance of the population was not on a mass scale and strictly controlled by laws.
Snowden was granted asylum by Russia last August after he spent a month in the transit zone at a Moscow airport. His location within Russia has been kept strictly secret ever since.
Putin said in December that he had never met Snowden but said "he's not uninteresting to me," while insisting that espionage is a "necessity."
Russians were able to submit videoed questions to Putin using cell phone apps. Snowden spoke against a dark background giving no clue to his location. His Russian lawyer, Anatoly Kucherena, told the RIA Novosti news agency that Snowden recorded and submitted the video.
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"I'd like to ask you: does Russia intercept, store or analyse in any way the communications of millions of individuals?" Snowden asked Putin.
"And do you believe that simply increasing the effectiveness of intelligence or law enforcement investigations can justify our placing societies rather than subjects under surveillance?"
Putin replied that the kind of "mass eavesdropping" on the population that Snowden exposed in the US was impossible as Russia's special services were under strict control.
"Mr Snowden, you're a former agent, I also had something to do with this, so we'll talk in a professional language," he greeted Snowden, drowned out by clapping from the audience.
"We have strict legal regulation of the use of special surveillance by special services, including tapping phone conversations, surveillance on the Internet and so on," Putin said, stressing a court decision was necessary for this.
Nevertheless Putin added that special services do use "appropriate modern means" to carry out surveillance of "criminals including terrorists."
"Of course we do not allow ourselves to do it in a mass scale, on an uncontrolled scale. And I hope, I very much hope, we never will.