Putin has not yet confirmed his candidacy but is widely expected to stand in March 2018 for a fourth term.
In an email sent to supporters, the 40-year-old anti-corruption campaigner and outspoken critic of President Vladimir Putin said: "presidential polls will take place in our country in 2018 and I have decided to take part in them."
Putin has not yet confirmed his candidacy but is widely expected to stand in March 2018 for a fourth term. If he wins, he could rule until 2024, when he would turn 72.
Levada independent polling agency in November gave Putin an 86 percent approval rating.
Navalny swept to prominence as a punchy orator at mass protests against Putin's re-election in 2011 and 2012, with slogans such as "Putin is a thief!"
The lawyer leads a group of anti-corruption whistleblowers that has published embarrassing revelations about state officials luxuriating in vast mansions and flying pets in private jets.
Navalny had been barred from standing for office under Russian law since he was handed a 5-year suspended sentence in 2013 on fraud charges that he and his supporters dismiss as politically motivated.
But in November Russia's Supreme Court quashed the conviction, freeing him up to run.
However, instead of dropping the case entirely, the Supreme Court sent it back for retrial in the provincial city of Kirov and proceedings have already begun in a trial that could see him banned again.
The secretary of the Central Electoral Commission Maya Grishina told RIA Novosti state news agency that Navalny's eligibility to run would "depend on the result of the readjudication."
In a campaign video posted on YouTube on Tuesday, Navalny vows to "fight for victory" and "discuss what everyone is silent about."
He lists issues including unfair distribution of wealth, selective justice by courts, Russia's costly participation in military conflicts and rampant corruption.
"How long will we see ministers who keep suitcases of money at home?" he asks, apparently referring to last month's arrest of economy minister Alexei Ulyukayev on suspicion of taking a $2 million bribe.
"We'll make Russia stronger, richer, freer," Navalny said, adding: "The truth is on our side."
Navalny already has experience of campaigning for high office.
He stood for Moscow mayor in 2012 with a Western-style campaign against a Kremlin-backed incumbent and scored a surprise second place with 27 percent of the vote.