The Russian Federation's recognition of the two states makes the former the first United Nations member country to do so. An announcement by Russian President Vladimir Putin was captured on video.
Following their 2014 declaration of independence from Ukraine, the region, known as the Donbass, became mired in war as Kiev sought to reclaim the territory. After nearly eight years of conflict, residents of Donetsk celebrated the news that Russia had formally recognised their sovereignty.
The US and its allies have largely condemned the development. A meeting by the United Nations Security Council is expected to take place later Monday.
The Donbass region is predominantly Russian-speaking, and, according to a 2001 census, ethnic Russians make up 38.2% of the population of Donetsk.
Dating back to the 1990s, shortly after the dissolution of the Soviet Union, the politics of the Donbass have been at odds with those of Kiev, Ukraine's capital city. The region voted to have their official language be Russian, a measure which was rejected in Kiev.
Since 2014, separatists have for much of the past eight years maintained control of the city of Donetsk, the largest city in the region.