In unusually blunt language, Kerry said that unless Moscow takes immediate steps to de-escalate the situation, Washington will have no choice but to impose additional sanctions.
The United States could announce new sanctions in as soon as 24 hours, CBS News State Department correspondent Margaret Brennan reported.
"Following today's threatening movement of Russian troops right up to Ukraine's border, let me be clear: If Russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake," Kerry said. "The window to change course is closing."
Accusing Russia of fomenting unrest and separatist sentiment in eastern Ukraine following its annexation of the strategic Crimean Peninsula, Kerry added: "Nobody should doubt Russia's hand in this."
"What is happening in eastern Ukraine is a military operation that is well-planned and organized, and we assess that it is being carried out at the direction of Russia," he said.
Russia accuses the U.S. of encouraging a pro-Western government in Kiev to adopt anti-Russian policies.
But Kerry said Russia was clearly flouting an agreement reached a week ago in Geneva by Russia, Ukraine, the United States and the European Union to take steps to de-escalate the crisis.
"Russia has refused to take a single concrete step in the right direction. Not a single Russian official, not one, has publicly gone on television in Ukraine and called on the separatists to support the Geneva agreement, to support the stand-down, to give up their weapons, and get out of the Ukrainian buildings," Kerry said.
"Instead, in plain sight, Russia continues to fund, coordinate, and fuel a heavily armed separatist movement in Donetsk," he said.
Kerry mocked Russia's contention that it is not meddling in Ukraine.
"Russian leaders are making increasingly outrageous claims to justify their action - that the CIA invented the Internet in order to control the world or that the forces occupying buildings, armed to the teeth, wearing brand-new matching uniforms and moving in disciplined military formation, are merely local activists seeking to exercise their legitimate rights. That is absurd, and there is no other word to describe it," he said.