The movement, known by its acronym FEMEN, which frequently targets the Catholic Church, posted a notice on its website saying the objective of the protest was "to raise awareness of Russia's war crimes against Ukrainian children."
The group accused the Vatican and the United Nations of "inaction" against Russia forcibly taking thousands of Ukrainian children to Russia.
According to the Italian news agency ANSA, the woman is a 25-year-old Ukrainian citizen named Yana Fedorets.
ANSA reported that officers from the Italian police force's special Vatican unit apprehended her at the Nativity scene. They released her after imposing a fine.
Video of the incident showed Fedorets jumping the wooden barricade around the Nativity scene and removing her shirt. Written in red on her back were the words, in English, "Putin is war criminal."
FEMEN activists have protested at the Vatican on numerous occasions, removing their shirts to reveal messages ranging from support for women's rights and the LGBTQ+ community to pro-abortion and anti-pope sentiments.
The Vatican, and particularly Italian Cardinal Matteo Zuppi of Bologna, Pope Francis' envoy for peace in Ukraine, has been focusing its diplomatic efforts on prisoner exchanges and on returning the children, who had been kidnapped and taken to Russia from Ukraine.