"Local conditions no longer allowed Business France to carry out its mission," an embassy statement said, complaining of "illegal seizures carried out on its bank account" and the "expulsion of its director who had a diplomatic passport".
Four senior French diplomats were among the 58 foreigners expelled by Russia in retaliation for Britain's expulsion of 140 Russians over the poisoning of ex-double agent Sergei Skripal and his daughter, Yulia.
The Russian authorities had made it clear that Business France can no longer operate in the manner prescribed by French law, the statement said.
Private firms will now help French companies operate in Russia.
The Russian foreign affairs ministry declared itself surprised by the decision, according to the Interfax news agency, adding that it was in favour of developing economic ties.
The announcement came as the French team headed home after winning the 2018 World Cup in Russia and as US President Donald Trump met Russian leader Vladimir Putin.