Putin's comments in China came a day after Russia's foreign minister, at Hillary Rodham Clinton's side in Moscow, said threatening sanctions was "counterproductive."
Russia's growing hostility to even discussing sanctions comes shortly after President Barack Obama canceled plans to build a missile defense shield in Europe. That was seen by some as a concession to Russia in hopes of persuading it to put more pressure on Iran to open its nuclear program for inspection.
The U.S. and a number of other countries contend the program is meant to develop nuclear weapons.
"If we speak about some kind of sanctions now, before we take concrete steps, we will fail to create favorable conditions for negotiations," Putin said. "That is why we consider such talk premature."
Putin's words served as a parting shot at the U.S. Secretary of State, who wound up a two-day visit to Russia as part of an effort to mend relations. She came to Moscow seeking solidarity for a firm warning to Iran of the consequences of refusing to stop enriching uranium and come clean about its nuclear activities.
Speaking to reporters shortly returning home from Beijing, Putin sounded less cooperative on Iran than President Dmitry Medvedev, who said in Pittsburgh last month that sanctions are sometimes inevitable.
Ever since, Russian officials have been backtracking from that remark, at least in public, while insisting they are not.
They have by no means ruled out sanctions. But Medvedev did not mention the word at a news conference in Pittsburgh the following day, and now both Foreign Minister Sergey Lavrov and Putin have emphasized that the focus, for the time being, must be on diplomacy.
"We must hold negotiations and search for compromises. If they are not found, then we will see what happens next," Putin said. He said that, if talks "fail to take place or end in a fiasco, then we could talk about further steps."
Putin said there was no contradiction between his statements on the issue and Medvedev's, and that Russia's position is developed collectively by its leadership. Lavrov said the same thing Tuesday, explaining that Medvedev's statement about sanctions last month meant that penalties would be considered only when all political and diplomatic efforts are exhausted.
But the shifting tone seems to have frustrated the United States, which believes it is critical to get tangible support from Moscow for at least considering new sanctions to make international pressure more likely to work.
Putin made it clear Russia disagrees.
"We believe that we should treat this issue with caution, and there is no need to scare the Iranians," he said.
Russia has walked a fine line on Iran for years. It is one of the six powers leading efforts to ensure Iran does not develop an atomic bomb. But it has close ties with Iran, a regional power close to Russia's vulnerable southern flank, and it is building the country's first nuclear power plant.
Along with China, Russia has used its clout as a veto-wielding U.N. Security Council member to water down previous sanctions against Iran. In contrast with the United States, Russian officials have repeatedly said they see no evidence Iran is seeking nuclear weapons.
Putin repeated that last month, and warned against the use of sanctions or force.
Since then, Iran has disclosed a previously secret uranium enrichment site. And Russian-American ties improved after Obama dropped plans to base missile defense facilities in Poland and the Czech Republic.
In the U.S. last month, Medvedev said the revelation of the enrichment site near the holy city of Qom raised "serious concerns" and urged Iran to prove its nuclear program is paceful. In China on Wednesday, Putin had what for him amounts to enthusiastic praise for the shift in missile defense, saying Russia is "completely satisfied with that decision" and that its leadership "has reacted with understanding and gratitude."
Associated Press Writer Steve Gutterman contributed to this report from Moscow.