In June, President Boris Yeltsin ordered that the 90-kilometer land border be established unilaterally after Russian and Estonian diplomats failed to agree on where to place the boundary in several different sections.
Last week, Russian border guards started marking off the disputed border areas.
Laar on Monday summoned Alexander Trofimov, the Russian ambassador to Estonia, to demand that Russia "im mediately stop" all work on the border, the Baltic News Service reported.
"Russia's actions may exacerbate the situation and lead to a conflict," Laar said.
"The situation is especially regrettable, bearing in mind, that there are several agreements on the border now under preparation," Laar added.
Russian officials have said that marking off the border would help fight smugglers and drug traffickers, who have used the Baltics as their favorite route to the West.
Estonia has demanded that Russia return two patches of land totaling 2,300 square kilometers.
The Soviet Union surrendered the land in 1920 but took it back 20 years later when the Soviets annexed all of Estonia.
Russia has denounced the Estonian claims as unfounded.
Russia and Estonia have also sparred over the removal from the Baltic state's territory of Russian troops, agreeing finally that the troops will leave by the end of August.
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