Putin, in Portugal for a summit with leaders of the European Union, said the standoff over Iran's nuclear program should be resolved through talks, pointing at North Korea as an example.
"Why worsen the situation and bring it to a dead end by threatening sanctions or military action," Putin said in a veiled reference to the US push for harsher international sanctions against Tehran.
"Running around like a madman with a razor blade, waving it around, is not the best way to resolve the situation," the Russian leader said.
Putin spoke after the Bush administration imposed sweeping new sanctions against Iran, cutting off key Iranian military and banking institutions from the American financial system for Tehran's alleged support for terrorism and nuclear weapons ambitions. Putin did not directly refer to the US actions.
The Russia president said dialogue proved successful in dealing with North Korea. "Not long ago it didn't seem possible to resolve the situation with North Korea's nuclear program, but we have practically solved it relying on peaceful means," Putin said.
At the same time, Putin said that he reaffirmed Russia's strong opposition to the proliferation of nuclear weapons on his trip to Iran last week.
Russia, which is building Iran's first nuclear plant, has opposed the US push for harsher UN sanctions against Iran, saying there has been no evidence of Iran seeking nuclear weapons.
Putin is in Lisbon to take on disagreements that have stood in the way of a strategic partnership agreement with the 27-nation bloc. The twice-yearly EU-Russia summits have not been upbeat events in recent years — reflecting a steady decline in relations over trade, energy, human rights, Balkan conflicts and other issues.