If Finland joined NATO it would provoke a "serious crisis" with neighbouring Russia, an expert report commissioned by the government warned on Friday.
The report also said that Finland and Sweden should decide together if they want to join the transatlantic military alliance.
"Finland joining NATO with Sweden staying out would create a strategically awkward situation, leaving Finland as a strategic outpost without territorial contiguity with NATO," the analysis said.
"Membership would probably also lead to a serious crisis with Russia, for an undefined period of time."
The report was commissioned by the government of Prime Minister Juha Sipila in the face of Russia's increased military activity in the Baltic Sea area and its role in the conflict in Ukraine.
Finland -- which shares a 1,340-kilometre (830-mile) border with Russia -- was attacked by its powerful neighbour during World War II but has maintain peace relations with Moscow ever since.
NATO has remained open to the idea of Finnish membership, but so far Helsinki has been reluctant to join and has contented itself with close cooperation with the alliance.
"Finland would be more exposed and vulnerable than it currently is if Sweden alone were to join NATO," the report concluded.
Russian Foreign Minister Sergei Lavrov warned in an interview with Swedish daily Dagens Nyheter that his country would not hesitate to "react" if Sweden joined NATO.
"If military infrastructure draws close to Russian borders we will naturally take the necessary technical-military measures," Lavrov said, but did not elaborate.
Sweden has maintained a policy of strategic non-alignment since the Cold War.
Sipila said his government had to be ready to seek NATO membership if necessary, adding: "With Sweden, we have promised not to surprise each other in these matters."