He said in an interview with ABC during his visit to Canberra, Censor.NET reports.
Senator McCain said Putin was the "premier and most important threat, more so than ISIS."
"I think ISIS can do terrible things. But it's the Russians who tried to destroy the fundamental of democracy and that is to change the outcome of an American election," he said.
"I've seen no evidence they succeeded, but they tried and they are still trying to change elections.
"They just tried to affect the outcome of the French election. So I view Vladimir Putin - who has dismembered Ukraine, a sovereign nation, who is putting pressure on the Baltics - I view the Russians as the far greatest challenge that we have."
He said the U.S. needed to respond to Russia with sanctions.
"We have done nothing since the election last November to respond to Vladimir Putin's attempt to change the outcome of our elections. So, way to go Vladimir. We haven't responded at all," he said.
"Hopefully when we get back from recess the Senate will enact sanctions on Russia."