He also hailed Britain's exit from the EU and backed a speedy trade deal with the UK.
He also hailed Britain's exit from the EU and backed a speedy trade deal with the UK, but condemned as "catastrophic" Chancellor Angela Merkel's decision to open Germany's doors to a flood of refugees.
"I said a long time ago that NATO had problems," Trump told The Times of London and Bild, Germany's biggest-selling daily.
"Number one, it was obsolete, because it was designed many, many years ago," he said.
"Number two, the countries aren’t paying what they’re supposed to pay."
"I took such heat, when I said NATO was obsolete. It’s obsolete because it wasn’t taking care of terror. I took a lot of heat for two days. And then they started saying Trump is right."
He added, though, "NATO is very important to me."
On the campaign trail, Trump said he would think twice about helping NATO allies if the United States were not "reasonably reimbursed" for the costs of defending them.
His comments caused consternation among eastern European NATO countries nervous about Moscow following Russia's annexation of Crimea and involvement in the conflict in Ukraine.
After Trump's victory, NATO Secretary General Jens Stoltenberg said the alliance had been a bedrock of transatlantic security for "almost 70 years" and was especially needed at a time of new challenges.
"This is no time to question the partnership between Europe and the United States," Stoltenberg said.
Spending has been a common source of friction within the 28-nation alliance over recent years.
The core military contributor to the alliance is the United States, which accounts for about 70 percent of spending.
In 2014, stung into action by Russia's intervention in Ukraine, upheaval in the Middle East and North Africa, NATO leaders agreed to reverse years of defence cuts and devote the equivalent of two percent of economic output to defence.
"The countries aren’t paying their fair share so we’re supposed to protect countries," Trump said in Sunday's interview.
"There's five countries that are paying what they’re supposed to. Five. It's not much."
In other remarks carried by The Times, Trump suggested cutting a deal with Russia in which nuclear arsenals would be reduced and sanctions against Moscow would be eased.
"They have sanctions on Russia -- let's see if we can make some good deals with Russia. I think nuclear weapons should be way down and reduced very substantially, that’s part of it," Trump said.
"But Russia's hurting very badly right now because of sanctions, but I think something can happen that a lot of people are gonna benefit," said the president-elect, who has previously expressed admiration for Russian leader Vladimir Putin.
There were no details about the specific sanctions that Trump had in mind, or their range.
Under Barack Obama, the US applied various sanctions against Moscow for its involvement in Ukraine, the Syrian war and for alleged cyber attacks to influence the US election.
Washington's European allies imposed sanctions against Russia over Ukraine in 2014. Those measures were renewed on December 19.
In other remarks, Trump said Brexit "is going to end up as a great thing" and said he backed a trade deal with post-EU Britain, which would be "good for both sides."
"We’re gonna work very hard to get it done quickly and done properly," said Trump, confirming he will meet British Prime Minister Theresa May soon after his inauguration on January 20.
"Other countries will leave" the European Union in future, Trump prophesied, largely due to the pressure the bloc was put under following a significant uptick in migrants and refugees arriving.
"If they hadn't been forced to take in all of the refugees, so many, with all the problems that it... entails, I think that you wouldn't have a Brexit. This was the final straw that broke the camel’s back," he said.
But he also criticised Merkel for letting Germany admit undocumented migrants enter the country, insinuating that this posed a security risk.
"I think she made one very catastrophic mistake and that was taking all of these illegals, you know taking all of the people from wherever they come from. And nobody even knows where they come from," Trump said, adding he had "great respect" for the chancellor.
Merkel took flak at home after her open-door policy aimed at desperate Syrian refugees brought 890,000 asylum seekers to Europe's biggest economy in 2015, contributing to the rise of an anti-migrant movement.
But in 2016, that figure dropped back sharply, to 280,000 arrivals the government said last Wednesday.