The Kremlin crook gushed over the "smart" tech mogul in a sit-down with Tucker Carlson that was aired last week.
Carlson, a former Fox News loudmouth who opposes US aid for Ukraine, asked Putin about the looming threat of an "AI empire", turning the conversation to Musk, whose Neuralink firm has stuck a microchip in a human brain.
"I think there's no stopping Elon Musk. He will do as he sees fit," Putin told Carlson.
"Nevertheless, you'll need to find some common ground with him. Search for ways to persuade him. I think he's a smart person. I truly believe he is.
His comments came as Carlson pressed him about his views on the development of AI, a sector Musk is pushing to advance.
"So you'll need to agree with him because this process needs to be formalised and subjected to certain rules."
The White House has told Americans to "not believe anything Vladimir Putin says" during his highly anticipated interview with Tucker Carlson. Carlson, 54, announced that he would interview the Russian leader following speculation after he was spotted leaving the Kremlin earlier this week.
Putin's comments came after he warned that mankind is "currently facing many threats due to the genetic researchers".
"It is now possible to create this superhuman. A specialised human being," Putin added.
"A genetically engineered athlete, scientist, military man. There are reports that Elon Musk has already had the chip implanted in the human brain in the USA."
He likened the development of AI to the threat of nuclear weapons or the development of gunpowder.
"It is impossible to stop research in genetics or AI today, just as it was impossible to stop the use of gunpowder back in the day," Putin said.
"But as soon as we realise that the threat comes from unbridled and uncontrolled development of AI or genetics or any other field, the time will come to reach an international agreement on how to regulate these things."
Musk indicated that he was tuning in for the historic interview (presumably because he knew he would be talked about) but did not directly respond to being name-checked by the Putin.
In the interview, Putin spoke favourably about his relationships with former presidents George W. Bush and Donald Trump.
Of Bush, he said: "I know that in the United States, he was portrayed as some country boy who does not understand much. I assure you that this is not the case.
"In general, on a personal human level, I had a very good relationship with him. He was no worse than any other American Russian or European politician. I assure you he understood what he was doing and others."
He also characterised his relationship with Trump as "personal".
But his comments on Biden were less enthusiastic as he revealed he had not spoken to the president since February 2022, when Biden had objected to him invading Ukraine.
He also appeared to mock Biden's continued financial support of Ukraine. The US has sent around £60 billion to the war-torn nation.
"If you want to stop fighting, you need to stop supplying weapons," Putin said. It will be over within a few weeks. That's it. And then we can agree on some terms before you do that; stop," he said.
The two-hour interview was posted on Carlson's website, the Tucker Carlson Network, shortly before 6 pm on Thursday.
The interview features a range of bombshell claims, including that Russia is continuing to develop hypersonic missiles "superior to everyone else" and that Bill Clinton offered Russia a spot in NATO but was overruled by his staff.