The group was identified as the Fayzarahmanist sect, named after its 83-year-old organiser Fayzrahman Satarov, who declared himself a prophet and his house an independent Islamic state.
Members of the sect found living with around 20 children have been charged with child abuse.
Authorities said the cult had existed without natural light or heating in an "expansive man-made cave" underneath a brick building on the outskirts of the central Russian city of Kazan.
Only a few of the 70 sect members were allowed to leave the property to work as traders at a local market, Russian media reported.
Deputy prosecutor Irina Petrova said the bunker had eight levels of rooms which were like "cells", lacking sunlight and ventilation.
Many of the children, aged between 18 months and 17 years, were born underground and had never seen daylight. One 17-year-old girl was reported to be pregnant.
The children will now be cared for at an orphanage.
The house above the bunker on a 700-square-metre plot of land will be demolished, police said.
London: Dozens of children have been rescued from an underground bunker of a Russian Islamist sect where they were living without daylight for a decade, Sky News reported on Thursday.
First Published: Thursday, August 09, 2012, 21:04