Serbia has warned Croatia about the impact on diplomatic ties
A similar move is expected on Thursday by Bulgaria, another Balkan nation.
Serbia's foreign minister said Kosovo was "an illegal state", warning that nations that had recognised it "cannot count on good relations with us".
Separately, UN police began returning to the Serb part of the Kosovo town of Mitrovica, after clashes there in which a UN officer was killed on Monday.
The police left the northern part of the town after fighting pitched battles with Kosovo Serbs who had earlier seized a city courthouse.
A UN policeman from Ukraine was fatally wounded during the clashes, and more than 130 people - both protesters and international forces - were wounded.
'Difficult to swallow'
On Wednesday, Croatia and Hungary officially announced that they had recognised Kosovo as an independent state.
"The government has accepted the decision of the Kosovo parliament on declaring the independence of Kosovo on 17 February," a statement by the government in Zagreb said.
Croatian Prime Minister Ivo Sanader told reporters he realised that the decision "is a difficult one for Serbia to swallow".
"But I don't expect a worsening of political and economic relations because there is no alternative to good neighbourly relations," Mr Sanader said.
Croatia's Deputy Prime Minister Slobodan Uzelac, an ethnic Serb, immediately tendered his resignation in protest against the move.
Croatia is the second former Yugoslav republic to recognise Kosovo, after Slovenia.
This just shows that Croats, Hungarians and Bulgarians will never be our friends
Kozak, BBC News website reader, Srbobran, Serbia
Balkan readers' views
In Budapest, the foreign ministry said that, in common with the majority of EU and Nato member states, Hungary had decided that "internationally supervised independence may offer the best way out of the crisis".
The Bulgarian foreign ministry said Sofia would officially recognise Kosovo on Thursday.
The announcements came shortly after Bulgaria, Croatia and Hungary said in a joint statement that they intended to recognise the authorities in Pristina.
The statement described Kosovo's case as unique and also made it clear that Bulgaria, Croatia and Hungary would support EU and Nato efforts to build democracy in Kosovo.
The document also expressed hopes that Belgrade would keep "its European orientation".
Hungary and Bulgaria are both part of the 27-member EU, and Croatia is negotiating EU membership.
Belgrade's warning
On Wednesday, Serbian Foreign Minister Vuk Jeremic urged Belgrade's neighbours not to recognise Kosovo, warning that there would be consequences.
"I call on states, particularly those of the region, not to take this step. Do not injure our country's territorial integrity and sovereignty," he said.
Serbian President Boris Tadic had already warned Croatia that recognising Kosovo would have an immediate negative impact on relations.
Croatia's own declaration of independence in 1991 prompted a four-year conflict with Serb-led Yugoslavia.
Ties have steadily improved but Belgrade is likely to take diplomatic action.
Serbia has recalled its ambassadors from about 30 countries that have recognised Kosovo.
While most EU member states have already recognised Kosovo's independence, a significant minority - including Spain, Slovakia, Romania and Cyprus - have refused to accept the declaration.
Serbians protesting against Kosovan independence on February 21, 2008. 
Croatia, Bulgaria and Hungary, all of which border Serbia, announced in a joint statement Wednesday that they will recognize Kosovo as an independent state.

"The decision on the recognition of Kosovo is based on thorough consideration," the statement said. 

Croatia and Hungary later confirmed they had officially recognized Kosovo, while Bulgaria is expected to make an announcement Thursday. Yesterday, Bulgaria's security council held a meeting regarding Kosovo. Angel Naidenov, spokesman of the Bulgarian Socialist Party, praised Kosovo for their efforts in establishing a "multi-ethnic and democratic country."

The statement says Kosovo's declaration of independence was prompted by the international community's failure to work out a solution between Serbia and Kosovo. "In these circumstances the change of the unsustainable status quo was unavoidable," the statement said.

The three nations express their interest in helping the European Union with stabilizing the region, and they wish to develop ties with a Kosovo that "maintains good relations with its neighbors, enjoys economic growth, and keeps its European orientation."

Serbian foreign minister Vuk Jeremić criticized their decision. "Every country that decides to recognize the illegally declared state of Kosovo breaches international law," he said, adding that countries who recognize Kosovo "cannot have good ties with Serbia." 

"I call on states, particularly those of the region, not to take this step. Do not injure our country's territorial integrity and sovereignty," Jeremić said.

Boris Tadić, Serbia's president, had previously warned Croatia that recognizing Kosovo would have a negative effect on their relations. "We want to have the best possible relations with this country," Tadić said. "But recognition of Kosovo is certainly not an act of goodwill between neighbours."

Croatian Prime Minister Ivo Sanader says he does not expect relations to worsen. "I do understand this is a difficult one for Serbia to swallow. That's one of the reasons we have waited until now. But I don't expect a worsening of political and economic relations because there is no alternative to good neighbourly relations."

Kosovo's deputy prime minister, Hajredin Kuçi said the decision was "very good for the Serbian perception and the people of Serbia that everybody who is in the neighbourhood is recognizing the new reality."