Putin confirmed the move Sunday after the Foreign Ministry on Friday
demanded the US cut staff numbers and announced a rash of other measures against Washington's missions.
The measures came after the US Congress passed a bill last week imposing fresh sanctions over Russia's meddling in the US' 2016 election. President Donald Trump has indicated he will sign the sanctions bill into law.
The response represents a sharp downturn in US-Russia relations after signs that Trump wanted to develop a new partnership with Moscow.
If Russian state media figures are correct, the forced reduction in staff numbers would gut the US mission. Putin was quoted as saying 755 out of "a thousand or so" employees would "have to stop their activities in the Russian Federation." That number would include diplomats and technical workers, he said.
It is not clear how many of those staff members are US citizens, but Kremlin spokesman Dmitry Peskov said Monday that the US can decide which people to dismiss.
"We waited a long time for things to perhaps change for the better," state media quoted Putin as saying. "We had such hope that the situation would change, but judging by the situation that will not be soon."
He added: "I thought it was time for us to show that we will not leave this without an answer. As for other possible measures, or whether it is a lot or not, this is quite sensible from the point of view of the work of the diplomatic department."
Putin delayed retaliating to sanctions imposed at the end of Barack Obama's presidency in 2016, when the US expelled 35 Russian diplomats from the country and seized two compounds used by Russian missions. Those actions were in response to Russia's election meddling, as well as its continued military aggression in Ukraine.
Putin is now seeking to reduce the number of US diplomats in Russia to 455, a figure equal to the number of Russian diplomats now in the United States, the Russian Foreign Ministry said Friday, giving a deadline of September 1 for the cuts.
The United States has not identified how many diplomatic employees are in Russia.
On Sunday, a senior US State Department official responded to Russia's demand, saying, "This is a regrettable and uncalled for act. We are assessing the impact of such a limitation and how we will respond to it."
The Russian Foreign Ministry on Friday
demanded that the US cut its diplomatic staff in Russia and said it would seize two US diplomatic properties, a Moscow storage facility and a country house outside the capital. Russia was set to take over the properties effective August 1.
Threats made earlier
Earlier Sunday, Russian Deputy Foreign Minister Sergei Ryabkov had threatened
further retaliation would be coming.
"If the US side decides to move further towards further deterioration, we will answer, we will respond in kind," Ryabkov said on ABC's "This Week."
"We will mirror this. We will retaliate. ... But my whole point is, don't do this, it is to the detriment of the interests of the US."
A request to the White House for comment was not immediately returned.
Bill would block Trump from easing sanctions
The bill, which passed the Senate on Thursday by a vote of 98-2, would also give Congress new power to stop Trump from easing sanctions against Moscow.
This bill would set into law penalties the Obama administration imposed against Russia in December for meddling in the US election last year and for its aggression in Ukraine.
Congress is investigating Russian hacking into the 2016 elections. US intelligence agencies say Russia intervened to tip the election toward Trump.