France has said conditions are "not right" for delivery of the first of two Mistral navy assault ships to Russia.
President Francois Hollande's office blamed Moscow's recent actions in Ukraine.
France had until now resisted pressure to halt the delivery, saying it had to respect an existing contract.
Russia's Deputy Defence Minister Yury Borisov said the French decision would not hold back Moscow's plans to reform its armed forces.
"Although of course it is unpleasant and adds to certain tensions in relations with our French partners, the cancelling of this contract will not be a tragedy for our modernisation," he said, quoted by Itar-Tass news agency.