"The Turks", he said, had "decided to lick the Americans in a certain place".
He was giving his wide-ranging annual news conference.
Touching on next year's US presidential election, the Russian leader called Donald Trump a "very colourful, talented person" and the "absolute frontrunner in the presidential race".
Mr Putin is now into his third term as president since 2000, battling an economic crisis. Critics say civil liberties have been steadily eroded under his rule.
He remains one of the world's most recognisable politicians, and has topped the list of The World's Most Powerful People compiled by Forbes magazine for the third year running.
On other issues raised at the news conference, President Putin
Russia deployed its air force to Syria in September in support of President Bashar al-Assad and has been carrying out air strikes on his opponents.
Its intervention has been heavily criticised by Turkey, the US and Gulf Arab states.
Mr Putin said the downing of the Russian jet by Turkish warplanes on the Syria-Turkey border was a "hostile act" but Russia was "not the country" to run away.
He said he saw "no prospect" of ties improving with Turkey - which Russia has put under sanctions - under its current leaders.
There was, he said, a "creeping Islamisation of Turkey that would have Ataturk rolling in his grave".
The remark appeared to be aimed at President Recep Tayyip Erdogan, whose AKP party, with its Islamist roots, has been accused of seeking to dismantle the secular state founded by Kemal Ataturk.
Mr Putin said Turkish officials should have picked up the phone to talk to Russia about their concerns that air strikes in Syria were hitting Turkmen rebels.
Vladimir Putin: Russia's action man president
Ever noticed that Russian President Vladimir Putin has an unusual walking style? He does not swing his right arm much at all when he walks - instead all the movement is on the left side of the body, giving him a very distinct lop-sided gait.
A team of European neurologists analysed countless YouTube videos of the president and other top Russian officials to find out why.
They discovered that they all had a similar gait, and it is probably linked to their KGB military training which requires them to keep their weapons close to their chest or in the right hand, giving them time to draw a gun on an unexpected enemy. As a result, only the left arm moves freely.
So President Putin officially has a "gunslinger's gait" - but doctors should be aware that a reduced right arm swing can also be an early sign of Parkinson's disease too, the British Medical Journal research says.
Is there such a thing as a 'hard man' walk?
Mr Putin insisted his country's economy was recovering.
While oil prices had fallen sharply, he said, manufacturing had shown slight growth and there was a healthy trade balance in agriculture.
"Our economy depends on oil and gas prices, we expected Brent to be worth $100 per barrel, but then it was $50, but this was an optimistic prediction too, our forecasts have to be amended again," Mr Putin said.
"GDP is falling, inflation is 12.3%, incomes, investment are falling too but the peak of the economic crisis is over."
Mr Putin is known for his marathon performances at his news conferences, where he frequently uses hard-hitting, colourful language.
This year's event lasted three hours and seven minutes - three minutes shorter than last year's.
The record for a Putin news conference was set in 2008, at four hours 40 minutes.
Putin's Ukraine 'admission': Analysis by Olexiy Solohubenko, BBC News
"We never said there were no people there who were carrying out certain tasks, including in the military sphere," President Putin told the annual news conference.
It is an important admission. After months of denial, insisting that the only Russians fighting in eastern Ukraine were either "volunteers" or "army servicemen on holidays", Mr Putin now says Russian military personnel are on the ground and are involved in the fighting.
He still maintains "there are no Russian troops there" and insists there is a difference. However the distinction may be very blurred for Ukrainian soldiers facing the Russian-backed separatists and Russian military personnel, as has now been admitted.
Whether the Russian servicemen are attached to the separatist units, or are there as commanders, trainers or advisers and are not on the ground as regular units, is in many ways a technicality. What President  Putin has admitted is that Russia is present in eastern Ukraine and is engaged in military activity.
It may be stating the obvious, but the way this admission has been made is not new.
For many months, President Putin denied Russian troops being involved in the takeover of the Crimea - he called the heavily armed soldiers seen there in modern uniforms without insignia, dubbed "green men", a local self-defence force.
But earlier this year, he told Russian TV that he had instructed his special forces (spetsnaz) to get directly involved in the annexation.
Russian President Vladimir Putin has used crude language in a furious new attack on Turkey over the shooting down of a Russian combat jet last month.