President Dmitry Medvedev says Russia is extremely upset after the Czech Republic agreed to host part of a US missile shield.
"We will not be hysterical about this but we will think of retaliatory steps," Mr Medvedev said.
US Secretary of State Condoleezza Rice said she was "disappointed" by Russia's reaction to the shield plans.
Earlier, the Pentagon criticised "bellicose rhetoric" from Russia "designed to make Europeans nervous".
'No hysteria'
On Tuesday, the US and the Czech Republic signed an initial deal to base a tracking radar system - an essential part of the missile shield - on Czech territory.
"We are extremely upset by this situation," Mr Medvedev told a news conference from the northern Japanese island of Hokkaido, where leaders of the G8 group of industrial countries are meeting.
Ms Rice said she had hoped that Moscow would realise that the shield "is not aimed at them".
"I'm sorry to say it was predictable - if disappointing - given all the effort both US Defense Secretary [Robert] Gates and I have made to offer the Russians significant ways for transparency, confidence and for co-operation," Ms Rice said from Sofia, in reaction to the Russian president's comments.
Earlier, a ...   more »