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The Georgian Foreign Ministry said in a statement that it summoned Russia's envoy in Georgia, Andrei Smaga, and handed him a note informing Moscow of Tbilisi's decision to terminate diplomatic relations in light of "Russia's hostile actions."
Georgia will maintain consular relations with Russia, the ministry said.
Under the Vienna Convention on Consular Relations, breaking off diplomatic ties does not automatically lead to a cut in consular relations.
The ministry's note required the Russian embassy in Tbilisi to stop its work on Wednesday, Russia's Itar-Tass news agency reported.
Smaga was quoted by Georgia's Caucasus Press news agency as saying Tbilisi's decision to sever ties with Moscow was "a mistake."
Moscow last week recognized Georgia's breakaway regions of South Ossetia and Abkhazia as independent states after a military conflict with Georgia in early August. The conflict ended with a six-point ceasefire agreement brokered by France.
Russia says its troops remaining in Georgia are serving on a peacekeeping mission agreed in the ceasefire deal. Tbilisi has declared the Russian troops in Georgia as "occupying forces."
Moscow's decision to recognize the two regions has drawn a storm of criticism from Georgia and the West.
By Tuesday's announcement, the Georgian government followed through on a parliament resolution last week that urged it to cut ties with Moscow.
The break in ties came on the heels of a one-day emergency EU summit, at which the 27-nation bloc decided to freeze talks on a new partnership pact with Moscow pending its full withdrawal of troops from Georgia, but shied away from sanctions.
In a separate statement, the Foreign Ministry in Tbilisi "commends" the decisions of the EU leaders to unanimously condemn Russia's move to recognize the independence of Abkhazia and South Ossetia.
Georgia "remains committed to" the ceasefire deal with Moscow, the statement said.
Georgia welcomes the EU's decision to get involved in building an international monitoring mechanism to replace additional Russian troops deployed outside the conflict zone in Georgia, it added.
Russia on Tuesday also welcomed the results of the EU summit, saying the bloc took a "responsible approach," though it regretted the freeze on talks.
French President Nicolas Sarkozy, whose country holds the current EU presidency, will travel to Moscow next week to talk to his Russian counterpart, Dmitry Medvedev, to try to resolve the conflict.