State news agency TASS says it failed to separate from the Soyuz-2.1B booster rocket after its launch from the Plesetsk cosmodrome on Saturday, Censor.NET reports citing Sky News.
The lost satellite is called Kanopus-ST, after the star Canopus, and is for both civilian and military use.
It took a decade to develop and was created to scan the Earth's oceans and weather systems from space, and to spot submarines.
An investigation has been opened into how it happened, and early indications suggest it was a problem with the satellite's attachment to the upper-stage rocket, which did not open up in time.
Within the next two or three days, the satellite will fall back to Earth and burn up in the atmosphere.
Russia has not issued any official comment on the problem.
However a space agency official reportedly said: "The spacecraft is recognised as lost since it is impossible to use it according to its purpose."
Another satellite carried by the rocket did manage to separate from the rocket and is orbiting normally.
Russia has lost several expensive satellites in recent years.
In 2014, a Russian rocket carrying its most advanced communication satellite to date fell back to Earth.
A year before that a rocket carrying three Russian-made Glonass navigation satellites also failed.
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