Russian officials declared a non-profit organisation founded by opposition leader Alexei Navalny, a staunch critic of President Vladimir Putin, a "foreign agent", the justice ministry said on its website.
Navalny's Anti-Corruption Foundation (FBK), which often publishes investigations into state officials, will now be subject to increased oversight and will have to present itself as a "foreign agent" on official documents.
Russia started a controversial list of foreign agent organisations, which in Russian implies spying for a foreign government, in 2012. This has led to many of the groups, including highly respected human rights organisations, closing down.
The group's director Ivan Zhdanov said the organisation and its employees "never received foreign funding", adding that all its activities were transparent.
"The fund is sponsored exclusively by Russian citizens," he said in a statement on Facebook.
Zhdanov said the move on Wednesday was "another attempt to suffocate" the foundation, "forcing us to stop issuing our investigations".
He said the group's lawyers would consider and appeal once an official notice was issued by the justice ministry.
Thorn in Kremlin's side
In August, Russian investigators launched a money-laundering probe into Navalny's foundation, which seeks donations from the public, accusing it of taking money that was procured illegally.
Last month, investigators raided dozens of Navalny's regional offices, as well as the homes of his supporters, following mass opposition protests in Moscow this summer.
The 43-year-old Navalny has long been a thorn in the side of the Kremlin.
Since emerging as the government's chief critic and a highly effective campaigner and organiser, Navalny has faced repeated legal action apparently aimed at hindering his activities.
Reacting to the announcement on Wednesday, Navalny took to Twitter with a sarcastic post.
"Putin's ministry of justice’s statement that FBK receives foreign money in its veracity corresponds to the statement of "Armenia" restaurant: each of our clients eats 4.3 kg of meat, and Navalny prevented this," he wrote.
Navalny, a former anti-corruption lawyer, emerged as a force in Russian politics in 2008 when he started blogging about alleged malpractice and corruption at some of the country's state-controlled corporations.
In July, he was sentenced to 30 days in jail for calling on people to demonstrate over the exclusion of opposition candidates from elections to Moscow's city parliament on September 8.