Under the new rules, "open fire" is prohibited on apartment balconies, as well as in the living areas of hotels and dormitories. Lighting matches and smoking are both classed as open fire, officials say.
"The Kremlin approves of all decisions that help save people's lives. We know how many fires are taking place, many of them with tragic consequences, causing a public outcry. This is why every saved life justifies these decisions," Kremlin spokesman Dmitry Peskov told reporters, according to TASS news agency. He called the move a "fire safety measure".
The ban will take effect on October 1. Barbecuing kebabs and lighting candles will also be banned, reports say.
There was initial confusion as to whether smoking was included in the ban, with one tobacco industry official insisting that the new rules were all about "alcoholics who grill shish kebabs on the balcony", according to the BBC.
Breaking the new fire safety rules could prompt a fine of up to 3,000 rubles ($47), while leaving a lighted cigarette that causes a fire could prompt criminal charges.
"Banning people from smoking on their own balconies is nonsensical. The government has simply banned people from using their own property," posted one Twitter user.
"And this is the kind of job we pay the government billions of rubles for each year," said another.
"What's the use of a balcony if you can't smoke there?" asked one commentator on the popular website TJournal.
The head of the All-Russian Movement for Smokers' Rights, Andrey Loskutov, told Interfax news agency: "They've banned it everywhere they could. Now they remembered they forgot about balconies."
( With inputs from IANS )