The decision means four candidates will be on the March 2 ballot, with Kremlin favorite Dmitry Medvedev widely expected to win a landslide victory.
Konstantin Merzlikin, an associate of Kasyanov, accused Russia's Central Election Commission (TsIK) of turning the election into a "farce."
But the TsIK said it refused to register Kasyanov because there were too many invalid and suspect entries on Kasyanov's signature lists of supporters. By law, a candidate has to submit at least 2 million voter signatures to be registered as a presidential candidate.
Russian prosecutors have launched a criminal probe in connection with the accusations.
Kasyanov, who served as prime minister under Putin from 2000 to 2004, has become one of the president's fiercest critics. He appeared to have little chance of winning the March election, with polls showing he had less than 1 percent support.
Medvedev On Course
The TsIK also cleared Putin's chosen successor, Medvedev, who is currently serving as first deputy prime minister and chairman of gas giant Gazprom.
Three other candidates were registered -- Communist leader Gennady Zyuganov, Liberal Democratic Party of Russia head Vladimir Zhirinovsky, and Democratic Party head Andrei Bogdanov.
Neither presents a significant challenge to Medvedev. Zyuganov and Zhirinovsky are both polling at less than 10 percent, while Bogdanov is forecast to win less than 1 percent.
On January 26, Zyuganov called on the Kremlin to ensure a fair election and said Medvedev was dominating airtime on state television.
"We have officially asked Medvedev to conduct a debate, because we think it is impossible to have proper and honest elections without a debate about the problems, so we will insist on this," Zyuganov told reporters at a party meeting in Moscow. "We will also organise massive demonstrations to protect the right of our citizens to have fair elections, against ballot-rigging, the rice of prices, and municipal despotism."
Former world chess champion Garry Kasparov intended to contest the election as a liberal opposition figure. His supporters, however, were not allowed to rent halls for a required nomination gathering. Boris Nemtsov, another opposition figure, announced in December that he would not run.
Western powers have also raised questions over Putin's almost unchallenged grip on power.
The TsIK said invitations to the Organization for Security and Cooperation in Europe (OSCE) to monitor the presidential contest will be issued on January 28. The OSCE's international elections monitoring body boycotted parliamentary polls held in December.
Putin is constitutionally banned from seeking a third consecutive term. He says he could become prime minister if Medvedev takes over the presidency.