Vladimir Putin has warned Joe Biden that new sanctions against Russia over Ukraine would be a big mistake, according to the Kremlin.
The Russian leader spoke with the US president for 50 minutes over the phone on Thursday.
A build-up of an estimated 100,000 Russian troops and military equipment on the Ukrainian border has sparked fears Moscow is preparing to invade the country.
Russia denies this, but it has made a series of security guarantees it wants from the West.
The crisis comes seven years after Russian forces marched into Crimea and seized the territory from Ukraine.
A ‘colossal mistake’
According to Yuri Ushakov, Mr Putin’s foreign affairs adviser, Mr Biden repeated the US threat of fresh Western sanctions if Russia invades Ukraine or escalates the situation.
The Russian president said in response that such a move could cause a complete breakdown in ties, according to Mr Ushakov.
“It would be a colossal mistake that would entail grave consequences,” Mr Ushakov added.
He said the Russian president told Mr Biden that Russia would act in the same manner Washington would if weapons were deployed near American borders.
But Mr Ushakov said the call created a “good backdrop” for further discussions.
US calls for ‘environment of de-escalation rather than escalation’
White House spokesperson Jen Psaki said Mr Biden “urged Russia to de-escalate tensions with Ukraine” during the call, which was requested by Russian officials.
She added: “He made clear that the United States and its allies and partners will respond decisively if Russia further invades Ukraine.
“President Biden also expressed support for diplomacy, starting early next year with the bilateral Strategic Stability Dialogue, at NATO through the NATO-Russia Council, and at the Organization for Security and Cooperation in Europe.
“President Biden reiterated that substantive progress in these dialogues can occur only in an environment of de-escalation rather than escalation.”
The White House indicated ahead of the conversation that Mr Biden would make clear to the Russian president that a diplomatic path remains open to reduce tensions.
The call comes ahead of talks between senior US and Russian officials in the Swiss city of Geneva on 10 January.
Kremlin spokesman Dmitry Peskov said Mr Putin and Mr Biden were not expected to take part in those talks.
The pair held a video call earlier this month, in which the White House said Mr Biden warned Mr Putin that any invasion of Ukraine would spark sanctions and do great damage to the Russian economy.
Moscow’s security demands, submitted earlier this month, included denying NATO membership to Ukraine and other former Soviet countries and the rolling back of Western military deployments in Central and Eastern Europe.
The US has also repeatedly made clear that Russia has no say in NATO’s composition or the promise of future NATO admission made to Ukraine and Georgia in 2008.
But Washington and its allies have agreed to hold talks with Moscow to discuss its concerns.
Mr Putin has said he will consider a range of options if the West fails to provide the guarantees he is seeking.