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Navalny's Anti-Corruption Foundation, which often publishes investigations into state officials, will now be subject to increased oversight and will have to present itself as a "foreign agent" on official documents.
Russia started a controversial list of foreign agent organisations, which in Russian implies spying for a foreign government, in 2012. This has led to many of the groups closing down.
The group's director Ivan Zhdanov said the move was "another attempt to suffocate" the foundation.
Writing on Twitter, Zhdanov said the organisation is "funded exclusively by Russian citizens" and never received foreign funding.
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In August Russian investigators launched a money-laundering probe into Navalny's foundation, which seeks donations from the public, accusing it of taking money that was procured illegally.
Last month, investigators raided dozens of Navalny's regional offices, as well as the homes of his supporters following mass opposition protests in Moscow this summer.
Navalny instructed supporters to vote strategically to block pro-Kremlin candidates in Moscow's recent local election.
The opposition politician organised the protests after popular opposition politicians were barred from standing in the Moscow parliament election.
The 43-year-old missed several of the demonstrations while serving a 30-day jail term for organising previous unauthorised rallies.
Since emerging as the Kremlin's chief critic and a highly effective campaigner and organiser, Navalny has faced repeated legal action apparently aimed at hindering his activities.