Finnish Prime Minister Sanna Marin says her country will decide whether to apply to join Nato "within weeks".
She said she saw no reason to delay the decision, at a joint news conference alongside Sweden's prime minister.
Her comments coincided with a report to the Finnish parliament that said membership of the bloc could result in "increased tensions on the border between Finland and Russia".
Moscow has warned Finland and Sweden against joining Nato in recent weeks.
Finland and Sweden are militarily non-aligned but Russia's invasion of Ukraine has prompted increasing public support to become members of the Western defensive alliance. Swedish leader Magdalena Andersson told reporters that the same "very serious analysis" was taking place as in Finland and she saw no point in delaying it.
Swedish newspaper Svenska Dagbladet reported on Wednesday that Ms Andersson was aiming to apply for membership in time for a Nato summit in late June.
Finland shares a 1,340km (830 miles) border with Russia, and Kremlin spokesman Dmitry Peskov has stressed that Moscow would have to "rebalance the situation" with its own measures if the Nato bid went ahead.
"I won't give any kind of timetable when we will make our decisions, but I think it will happen quite fast," said Ms Marin. She pointed out that Nato membership offered Finland the security guarantee of Article Five, whereby an attack on one member is viewed as an attack on all.
While the two leaders met in Stockholm, Finland's security review was being launched in Helsinki. Foreign Minister Pekka Haavisto said Russia's war had changed the security environment in Europe and forced the review of Finnish defence policy.
Russia's invasion of Ukraine is transforming European security. The Nato military alliance has been given new purpose and now - potentially - could get new members too.
Voters in Finland and Sweden have long cherished their non-aligned status. But now the mood is changing. Sanna Marin's predecessor as prime minister, Alexander Stubb, says the decision is a "foregone conclusion".
Sweden is also looking afresh at Nato - the country's ruling Social Democrat party is reviewing its historic opposition to joining the alliance.
But Russian spokesmen have repeatedly said any expansion of Nato would be considered a "provocation" and warned there would be "consequences".
What the report says
The report warns that "military force might be used solely against Finland," and that the security situation in Europe and Finland is more serious and more difficult to predict than at any time since the Cold War.
It also noted that were Finland to join the bloc, it would be forced to spend up to 1.5% more of its budget on defence, but added that membership of the alliance would offer the country a greater capacity to defend itself. Finland has already announced a 40% increase in its defence budget by 2026.
Any potential application would also welcome a bid by neighbouring Sweden to seek membership of the bloc, it added.
The Finnish government emphasised that the report "does not include any conclusions or present new security policy guidelines" and said that no decisions would be made before parliament had debated its findings.
Ms Marin told reporters that "all the parliamentary groups, government and also the president will have the possibility to make the decisions within upcoming weeks".
Defence Minister Antti Kaikkonen said the military situation remained calm but cautioned that the army must be ready for possible changes. The prime minister warned earlier that Finland had to be prepared for a Russian attack during any potential Nato evaluation process.
There have been reports that Moscow has started to move military equipment towards the Russian-Finnish border, although US officials said they had seen nothing to confirm that.
Finland has maintained a policy of military neutrality designed to avoid confrontation with Russia since Nato was formed in 1949. In 1939, Finland fought off an invasion from the Soviet Union in what became known as the Winter War, but ended up ceding most of its eastern province of Karelia.
Ms Marin's ruling Social Democratic party has traditionally supported the policy of non-alignment and she reiterated it as recently as March. But recent opinion polls show that public support for joining Nato has climbed from 28% in February to 62% last month.
Finland retains a large standing military of around 21,500 troops and has the capacity to call up over 200,000 reservists in the event of war.