Before the new law was passed by the State Duma, the use of the national flag by ordinary citizens - including at international sports events and on homes - was technically a criminal offense. However, the ban was never actually observed or enforced.
The authors of the law said it would promote patriotic sentiment.
"There are moments in life when you want everybody to know that you are a citizen of a great nation, a Russian citizen," Oleg Valenchuk, a member of the pro-Kremlin United Russia faction, said.
"I believe the Russian flag carried by an ordinary person is a more striking and genuine manifestation of patriotism than state banners in many civil servants' offices," he said.
The State Duma also approved amendments to mitigate punishment for the desecration of the national flag and other state symbols. The punishment - a fine of 300-500 rubles ($11-$19) for ordinary individuals and 500-1,000 rubles ($19-$38) for officials - will be only applied to violations committed during formal events.
Previously, the law stipulated three months to two years in prison as punishment for desecrating the national flag and other state symbols.
The Russian flag, displaying horizontal white, blue and red stripes, was officially adopted in 1896, and discarded after the 1917 Bolshevik Revolution. It was reinstated in 1993 with slight changes, and became official in 2000.
The Duma also approved amendments allowing the use of the terms "Russian Federation" and "Russia" and their derivates in private firms' names, a right earlier enjoyed only by state-controlled enterprises.
