The K-159 sank 170 metres down onto the seabed in the Barents Sea. Officials said the 40-year-old vessel's nuclear reactors had been shut down in 1989 when it was decommissioned. They discounted an ecological threat.
The submarine was being towed along the coast of the Kola Peninsula to a scrapyard at Polyarny when supporting floats broke apart. The K-159 tipped over and went down 5 km northwest of Kildin Island.
An environmental pressure group, however, said water was likely to seep into the reactors and that radiation levels in the area would have to be watched closely.
In Italy where he is on a visit, President Vladimir Putin vowed a thorough investigation.
Putin promises thorough
"Of course, all reasons for the tragedy will be established," Putin told reporters on board the warship Moskva off Sardinia.
Chief military prosecutor Alexander Savenkov told Russian TV First Channel that the submarine's captain, Sergei Zhemchuzhov, was being questioned about the incident, which took place in an early morning storm.
Kravchenko said both reactors had been switched off on the K-159 in 1989 and "put into a nuclear safe condition".
"At this site, the radioactive level is normal," he said.
Navy spokesman Igor Dygalo said all weapons, including torpedoes and rockets, had also been removed from the vessel when it was decommissioned.
"Of course, all reasons for the tragedy will be established"
Vladimir Putin Russian President
Norwegian environmental group Bellona, which has long studied Russia's nuclear arsenal, blasted Moscow for allowing the ageing vessel to be towed in rough seas and said new disasters were likely because of poor safety measures.
Bellona head Frederic Hauge said there was no seal around the reactors to stop water seeping in.
"Water is likely to get in and that will cause leaks," he said, adding radiation levels would have to be monitored to see if there was any impact on fish.
But he said that even if all the radiation leaked out it would only slightly raise levels in the area.
The incident bore uncanny echoes of the Kursk disaster in which all 118 crew were killed. Putin was on holiday at the time and returned to face criticism that he had not responded adequately to a national tragedy.