The US will also close two Russian compounds used for intelligence-gathering, in Maryland and New York, as part of a raft of retaliatory measures.
President Barack Obama had vowed action against Russia amid accusations it directed hacks against the DNC and Hillary Clinton’s campaign.
Russia has denied any involvement.
The 35 Russian diplomats from the Washington DC embassy and the consulate in San Francisco have been declared “persona non grata” by state department, giving them and their families 72 hours to leave the US.
The Russian government is expected to respond in turn by expelling US diplomats.
The state department move follows calls from senior senators to sanction Russian officials who are believed to have played a role in the hacking, which some lawmakers referred to as America’s “political Pearl Harbor”.
President-elect Donald Trump has dismissed the claims as “ridiculous” and said Americans should “get on with our lives” when asked about the possibility of sanctions before the announcement on December 28.
Sanctions have also been announced against nine entities and individuals including the GRU and FSB Russian intelligence agencies.
The US Department of Treasury said that the move targeted those responsible for “undermining election processes or institutions”.
Konstantin Kosachyov, chairman of the international affairs committee in the upper house of the Russian parliament, told the RIA news agency the expulsion represented “the death throes of political corpses”.
In a statement President Barack Obama said “all Americans should be alarmed by Russia’s actions”.
The outgoing president called the moves a “necessary and appropriate response to efforts to harm US interests”, adding it would not be “the sum total of our response to Russia’s aggressive activities”.
Barack Obama also announced the US would declassify technical information related to Russian cyber activity to “help network defenders in the United States and abroad identify, detect, and disrupt Russia’s global campaign of malicious cyber activities”.
House Speaker Paul Ryan, the top Republican in Congress, said in a statement that despite the measures being overdue “it is an appropriate way to end eight years of failed policy with Russia”.
Paul Ryan added that “it serves as a prime example of this administration’s ineffective foreign policy that has left America weaker in the eyes of the world”.
Maryland Democrat Senator Ben Cardin applauded sanctions against Russia but called them insufficient.
Ben Cardin called for Congress to take action separately from the White House, and plans to introduce legislation to establish a committee “to further examine the attack and Russian’s efforts to interfere in our election”.
In a joint statement by the Department of Homeland Security, the Office of the Director of National Security, and the FBI, officials appeal to companies to “look back within their network traffic” and report any signs of “malicious cyber activity” to law enforcement.
The Russian hacking, which the intelligence agencies describe as a “decade-long campaign” included methods such as “spearphishing, campaigns targeting government organizations, critical infrastructure, think tanks, universities, political organizations, and corporations; theft of information from these organizations; and the recent public release of some of this stolen information”.
Emails stolen from John Podesta and from the servers of the DNC were released during the 2016 presidential election by WikiLeaks.
Several US agencies, including the FBI and CIA have concluded that the hacked information was released to cause damage to Hillary Clinton and the Democrats in order to favor Donald Trump.
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