In a televised statement, Puigdemont accused the central government of trampling on the will of independence-seeking Catalans.
Madrid’s decision to seize Catalan powers in response – the first curtailment of regional autonomy since Francisco Franco’s brutal 1939-75 dictatorship – constituted an “aggression”, he added.
The separatist leader said “democratic opposition” was the only way forward, without specifying what form this could take.
Spain remains on a knife edge as it grapples with the worst constitutional crisis in its contemporary history, triggered by the unlawful October 1 referendum.
Throwing down the gauntlet in the escalating standoff, Catalan legislators on Friday passed a motion, by 70 votes out of 135 in the regional parliament, to declare a Catalan republic.
Opposition MPs refused even to vote on the issue and walked out in disgust.
The central government’s intervention was “contrary to the will expressed by the citizens of our country at the ballot box,” Puigdemont said. “In a democratic society, only parliaments can appoint or dismiss presidents.”
Rajoy responded to Friday’s independence declaration by axing the Catalan government and parliament and calling for elections to be held on December 21 to replace them.