French President Francois Hollande early Friday announced the measure to add a dozen more Russians and Ukrainians to a list of people subject to travel bans and asset freezes after a meeting of EU heads of state gathered in Brussels.
The expanded sanctions bring the total number of figures targeted by the bloc to 33. The names of those targeted will be made public later on Friday.
"Russia must understand that it cannot continue, that it must take the path of dialogue," Hollande said.
The EU leaders also agreed to ask the European Commission to prepare an assessment of the potential impact of broad economic sanctions against Moscow, which would represent the "third phase" of financial sanctions.
President of the European Council Herman Van Rompuy told a news conference that leaders are also prepared to send an observer mission to Ukraine if the OSCE, a pan-European security watchdog, fails to put forward its own mission.
Bloc leaders also cancelled a planned summit with Russia on June 3.
Van Rompuy said the economic sanctions threatened against Moscow are not intended as "retaliation," but to stop Russian action in Ukraine.
On Thursday, US President Barack Obama ordered further economic sanctions against nearly two dozen members of Russian President Vladimir Putin’s inner circle.
Russia retaliated by issuing its own list of sanctions against certain US individuals. Prominent opposition Republican politicians, like the Speaker of the House of Representatives John Boehner and Senator John McCain, a defeated presidential candidate in 2008, made the Kremlin's list.
European leaders arrived in Brussels for the summit earlier Thursday as Russian lawmakers in the Duma approved the measure to incorporate Crimea into the Russian Federation following Sunday's contentious referendum on leaving Ukraine.
hc/ccp (Reuters, AFP, AP, dpa)