Washington has called the new Russian law misguided, saying it ties the fate of children to "unrelated political considerations", and analysts say it is likely to deepen a chill in US-Russia relations and harm Putin's image abroad.
Fifty-two children whose adoptions by American parents were under way will now remain in Russia, the Interfax news agency cited Russia's child rights commissioner, Pavel Astakhov, as saying.
The new law, which has also ignited outrage among Russian liberals and child rights' advocates, takes effect on Jan. 1.
The legislation, whose text was issued by the Kremlin, will also outlaw some non-governmental organisations that receive US funding and impose a visa ban and asset freeze on Americans accused of violating the rights of Russians abroad.
Pro-Kremlin lawmakers initially drafted the bill to mirror the US Magnitsky Act, which bars entry to Russians accused of involvement in the death in custody of anti-corruption lawyer Sergei Magnitsky and other alleged rights abuses.
The restrictions on adoptions and non-profit groups were added to the legislation later, going beyond a tit-for-tat move and escalating a dispute with Washington at a time when ties are already strained by issues such as the Syrian crisis.
The adoption ban may further tarnish Putin's international standing at a time when the former KGB officer is under scrutiny over what critics say is a crackdown on dissent since he returned to the Kremlin for a third term in May.
"The law will lead to a sharp drop in the reputation of the Kremlin and of Putin personally abroad, and signal a new phase in relations between the United States and Russia," said Lilia Shevtsova, an expert on Putin with the Carnegie Moscow Centre.
"It is only the first harbinger of a chill."
Putin's spokesman, Dmitry Peskov, said the Magnitsky Act - the US bill which prompted the new Russian law - had "seriously undermined" the "reset", the moniker for the effort US President Barack Obama launched early in his first term to improve relations between the former Cold War foes.
Putin has backed the hawkish response with a mixture of public appeals to patriotism, saying Russia should care for its own children, and with belligerent denunciations of what he says is the US desire to impose its will on the world.
SHARP CRITICISM
Seeking to dampen criticism of the move, Putin also signed a decree ordering an improvement in care for orphans.
Critics of the Russian legislation say Putin has held the welfare of children trapped in a crowded and troubled orphanage system hostage to political manoeuvring.
"He signed it after all! He signed one of the most shameful laws in Russian history," a blogger named Yuri Pronko wrote on the popular Russian site LiveJournal.
A hashtag that translates as "Putin eats children" was being widely used on Twitter in Russia on Friday, and pro-Kremlin microbloggers hit back with: "Putin supported orphans".
Russian authorities say the deaths of 19 Russian-born children adopted by American parents in the past decade were one of the main motives for the law as well as what they perceive as the overly lenient treatment of those parents by US courts and law enforcement agencies.
However, critics of the bill say Russian orphanages are woefully overcrowded and that adoptions by Russian families remain modest, with some 7,400 adoptions in 2011 compared with 3,400 adoptions of Russian children by families abroad.
More than 650,000 children are considered orphans in Russia - though some were rejected by their parents or taken from dysfunctional homes. Of those, 110,000 lived in state institutions in 2011, according to government figures.
Americans have adopted more than 45,000 Russian children since 1999, including 962 last year.
In a poll conducted on Dec. 23 by the Moscow-based Public Opinion Foundation, 75 percent of respondents said Russia should place additional restrictions on foreign adoptions or ban them.
The acquittal on Friday of the only person being tried over Magnitsky's death will fuel accusations by Kremlin critics that the Russian authorities have no intention of seeking justice in a case that has harmed Russia's image.
A Russian court acquitted Dmitry Kratov, the former deputy head of a jail where Magnitsky was held before his death in 2009, after prosecutors dropped charges against him.
Lawyers for Magnitsky's family said they will appeal and called for further investigation.
Magnitsky's colleagues say he is the victim of retribution from the same police investigators he had accused of stealing $230 million from the state through fraudulent tax refunds - a similar charge to the one Magnitsky faced.
The case against Magnitsky was closed after his death but was reopened again in August 2011.
In an unprecedented move, Russia is trying Magnitsky posthumously for fraud, despite protests from his family and lawyers that it is unconstitutional to try a dead man. A preliminary hearing is scheduled next month.
Magnitsky's death triggered an international outcry with Kremlin critics saying it underscored the dangers faced by Russians who challenge the authorities.
The Kremlin's own human rights council said Magnitsky was probably beaten to death, but Putin said in a televised press conference last week that he had died of heart failure.
