“I want to congratulate you and express the hope that this is another, albeit small, gesture and it might be a sign of the gradual normalisation of relations between our countries,” the Russia president said to the US actor and director as the document was handed over.
“Spasibo bolshoye,” replied Seagal (thank you very much).
The Kremlin released a transcript of their conversation, with Mr Putin saying they had been discussing citizenship for “quite a while”.
Seagal, 64, who has Russian heritage and is a regular visitor to the country, has been a vocal supporter of Mr Putin, who earlier this month signed an order granting his Russian citizenship.
In the 1990s the star opened a branch of the restaurant chain Planet Hollywood in Moscow, and has since participated in a number of publicity campaigns for Russian companies.
Russian business newspaper Vedomosti reports the actor could acquire a stake in Russian IT company Galaxy.
Seagal’s fame peaked in the late 1980s and early 1990s with films such as Under Siege and Above the Law, but he remains hugely popular in eastern Europe and was granted Serbian citizenship in January.
He is not the first celebrity to be awarded citizenship by the Kremlin.
French actor Gerard Depardieu got his in 2013, saying at the time he was leaving France to avoid proposed tax increases.
US boxer Roy Jones Jr got his Russian passport in 2015, writing on his website later: “This is the happiest day of my life.”
US relations with Russia have been increasingly under the spotlight since Donald Trump was elected.
Mr Putin has had a strained relationship with President Barack Obama, but Mr Trump issued warm remarks about the Russian leader during his campaign.
After his election, the President-elect and Mr Putin agreed in a phone call to work on what the Kremlin called “the extremely unsatisfactory state of Russian-US relations at present”.
Russian MPs applauded Mr Trump’s victory and Mr Putin is reported to be hoping for a deal to relieve Western sanctions on Russia as a result of the annexation of Crimea, which are crippling the economy.