Ukraine has accused Russia of trying to ramp up military support for separatists after Moscow refused to extend the mandate of international observers stationed on the border between the two countries.
Hundreds of OSCE monitors have been involved in two long-running missions in the areas where Ukrainian troops and pro-Russian separatists began fighting in 2014.
On Thursday, Russia notified the Vienna-based OSCE it would not be extending the mandate of one of the missions, at the Gukovo and Donetsk border crossing points, after Sept. 30.
In a statement released late on Thursday, Ukraine's foreign ministry said the decision "may lead to further escalation in the Russian-Ukrainian armed conflict."
Russia's refusal to extend the OSCE mandate, Kiev said, was "evidence of its plans to continue and increase the supply of weapons, military equipment, ammunition, regular troops and mercenaries" across the border.
On Friday, Russian Foreign Ministry spokeswoman Maria Zakharova hit back, saying Ukraine and the West had not shown "proper respect" for Russia's agreement to deploy OSCE monitors on the border.
"It has become obvious that the work of the OSCE monitoring mission on the Russian-Ukrainian border does not have a positive effect on the settlement process, and its continuation is unadvisable," Zakharova added.
The U.S. said it "deeply regrets" Moscow's decision.
"Despite the limited geographic scope of the mission, it plays a significant role in providing impartial reporting of border crossings at these two points, and more broadly as a confidence-building measure," said Courtney Austrian, the U.S. representative at the OSCE.
During the seven-year conflict, the Ukrainian military has repeatedly captured Russian military personnel fighting alongside separatists and OSCE observers have confirmed the presence of modern Russian-made military equipment in eastern Ukraine.
Ukraine and its Western allies have accused Russia of dispatching arms and troops across the border. Russia has denied those claims.