He says he is hopeful "things will not go as far as a large-scale conflict"
Vladimir Putin has said he believes world leaders can use "common sense" and ease tensions over North Korea through diplomatic means.
The US claimed Pyongyang was "begging for war" after the reclusive state purportedly detonated a hydrogen bomb on Sunday - its sixth and most powerful nuclear test to date.
Though President Trump has claimed "talk of appeasement" with North Korea "will not work", Mr Putin said he believes the Trump administration is "willing to resolve the situation".
Speaking at an economic forum, the Russian President said: "I am sure that things will not go as far as a large-scale conflict, especially with the use of weapons of mass destruction.
"All the competing sides have enough common sense and understanding of their responsibility. We can solve this problem through diplomatic means."
In response to Sunday's test, the White House wants the UN Security Council to slap an oil embargo on North Korea as well as hitting dictator Kim Jong Un with a travel ban and freezing his assets.
The proposed measures, which are set to be discussed on Monday, also include a ban on the country exporting textiles and the hiring of North Korean workers abroad.
Russia has described the draft resolution as a "little premature" and put forward a plan in which the US and South Korea would stop major exercises in exchange for North Korea halting its weapons programmes.
Mr Putin, who shared a platform with South Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe, warned it was "impossible to scare" Pyongyang.
"We are telling them that we will not impose sanctions, which means you will live better, you will have more good and tasty food on the table, you will dress better," he said.
"But the next step, they think, is an invitation to the cemetery.
"And they will never agree with this."
President Trump has urged China, which is the North's main trading partner and provides much of its oil supply, to put more pressure on Kim to limit his nuclear programme.
The US leader told reporters he had a "strong" and "frank" phone conversation with Chinese President Xi Jinping about North Korea and said neither of them would put up with the rogue nation's provocative actions.