Gen Sir Adrian Bradshaw, deputy commander of Nato forces in Europe, said there was a danger Vladimir Putin could try to use his armies to invade and seize Nato territory, after calculating the alliance would be too afraid of escalating violence to respond.
His comments follow a clash between London and Moscow after the Defence Secretary, Michael Fallon, said there was a "real and present danger" Mr Putin could try to destabilize the Baltic states with a campaign of subversion and irregular warfare.
The Kremlin called those comments "absolutely unacceptable".
Sir Adrian told the Royal United Services' Institute there was a danger such a campaign of undercover attacks could paralyze Nato decision making, as members disagreed over how much Russia was responsible, and how to respond.
Nato commanders fear a campaign of skilfully disguised, irregular military action by Russia, which is carefully designed not to trigger the alliance's mutual defence pact.