Estonia summoned Russia's ambassador on Wednesday after its military said the Ilyushin-20 plane had entered its airspace for about a minute.
But Russia said the plane had been on a training flight and had not violated Estonian airspace.
Russia has been accused of several recent border violations in the region.
The conflict in eastern Ukraine, which the West says Russia has stoked by supporting the rebels, has prompted sanctions against senior figures in Moscow and bans on EU goods in response.
In the past week, non-Nato member Sweden has been searching for a submarine reportedly sighted in its waters in the southern Stockholm archipelago some 48km (30 miles) from the capital. The suspected submarine is widely assumed to be Russian.
Last month, Estonia accused Russia of abducting one of its security officials on the border.
Nato said the Ilyushin plane had taken off from the Russian Baltic coast enclave of Kaliningrad on Tuesday and was "first intercepted by Danish F-16 jets when it approached Denmark", before flying north towards Sweden.
Intercepted by Swedish planes, the Ilyushin entered Estonian airspace for less than a minute and was escorted out by Portuguese F16s, the alliance said.
A Russian defence ministry spokesman said the military plane had taken off from Khrabrovo airfield in Kaliningrad and flown "over neutral waters of the Baltic Sea".
The flight was carried out "in strict adherence to the international regulations on the use of airspace", a spokesman told Interfax news agency.
Source: BBC News