Putin signed the memorandum with Recep Tayyip Erdogan
The prime ministers of Turkey and Russia have signed a series of agreements regarding co-operation on major oil and gas projects.
One deal is for the construction of a pipeline through Turkish waters in the Black Sea.
Moscow hopes the South Stream pipeline will become a viable new route to supply Russian natural gas to Europe.
Vladimir Putin sealed the agreement with Recep Tayyip Erdogan during a one-day visit to Ankara.
Among the other accords signed at the meeting was an agreement on peaceful nuclear co-operation, which included a push towards building Turkey's first nuclear power station.
The Russian prime minister said the negotiations would "open the road to new major projects in the energy sector".
"Such strategic projects as South Stream... and the construction of Turkey's first nuclear power plant can play a key role in promoting co-operation in this sphere," he was quoted as saying by Russia's Itar-Tass news agency.
"It is very important for the reliable supply of gas to the whole of Europe and for the further development of our co-operation with Turkey."
The South Stream pipeline, which will run from Russia to Bulgaria, will give Moscow another supply route for its gas exports to Europe. At least twice in recent years these have been disrupted by disputes with Ukraine.
Turkey is expected to benefit from Russian help with building gas storage facilities, and the increased influence that comes with being an energy hub.
Regional energy hub?
Thursday's agreement underscores Turkey's strategic position as a conduit for energy supplies flowing westwards, says the BBC's diplomatic correspondent, Jonathan Marcus.
Turkey, which hopes to become a regional energy hub, signed a rival deal last month with four European Union countries for the construction of a pipeline to bring Central Asian gas to Europe, bypassing Russia.
The Nabucco line has no guaranteed supply of gas
Once completed, the long-planned 3,300km (2,046-mile) Nabucco gas pipeline will bring up to 31bn cubic metres of gas a year from the Caspian and the Middle East across Turkey and into Europe.
It will provide an important energy supply alternative to Russia, which already meets about 30% of Europe's gas needs.
The European Union-backed scheme bypasses Russia and is seen as a way of reducing Moscow's ability to turn off the tap, our correspondent says.
But while Nabucco may reduce the EU's dependence on Russian gas, both Mr Putin and the European Commission insist that Nabucco and South Stream are not rivals.
While both projects are still on the drawing board, they suggest Turkey is effectively being wooed by both the Europeans and the Russians, our correspondent adds, and is in the enviable position of being able to say "yes" to both.
Also present at the Ankara negotiations was Italian Prime Minister Silvio Berlusconi, as the Italian energy company, ENI, is a partner of the Russian state-owned Gazprom in the South Stream project.