There were celebrations on the streets of what is now the world's newest state after the declaration.
Serbian Prime Minister Vojislav Kostunica reacted to the declaration by saying that it "violates international order," and that it was a "false state." Belgrade has ruled out the use of force to retake Kosovo, however.
Serbia's main ally, Russia, immediately called for emergency UN Security Council consultations on the issue. Moscow is deeply opposed to the unilateral declaration of independence by Kosovo. It has said that this contradicts international law, and sets a dangerous precedent for other secessionist regions.
NATO peacekeeping troops are on alert, ready to deal with any clashes between ethnic Albanians and Serbs in the flashpoint town of Mitrovica, in northern Kosovo.
The U.S and a large number of European states are expected to recognize Kosovo's sovereignty on Monday. Three EU states, Cyprus, Romania and Slovakia, had earlier informed other EU governments that they would refuse to recognize Kosovo.
A short time before the declaration of independence, Kosovo police stopped hundreds of Serbian reservists who had attempted to cross into the then-Serbian province to protest its breakaway from Belgrade.
Russia has hinted that it may now recognize Georgia's breakaway regions of Abkhazia and South Ossetia.
"The declaration of sovereignty by Kosovo and its recognition will undoubtedly be taken into account in [Russia's] relations with Abkhazia and South Ossetia," the Russian Foreign Ministry said in a statement on Friday.
South Ossetia and Abkhazia declared independence from Georgia following bloody conflicts in the wake of the Soviet Union's 1991 collapse.
The European Union gave its final approval for sending a civilian and police mission to Kosovo to replace the current UN mission, diplomatic sources in Brussels said on Saturday.
Kosovo has been a UN protectorate since the NATO bombing of the former Yugoslavia ended a conflict between Albanian and Serb forces in 1999.