The Ukrainian Paralympic Committee decided against boycotting the games, announcing a few hours before Friday's opening ceremony that its athletes would stay.
The decision came after discussions between Ukrainian officials and athletes over whether to pull out in light of the crisis back home and Russia's military takeover of the Crimean peninsula.
"We are staying at the Paralympics," Valeriy Sushkevich, president of the National Paralympic Committee of Ukraine, said at a news conference.
However, he added that the circumstances were far from ideal.
"I don't remember a situation when the organizing country during a Paralympics started an intervention on the territory of a country taking part," Sushkevich said, according to the R-Sport agency. "I don't know what to extent the team can focus on the result now."
The Ukrainian official said the team would leave Sochi if there is any escalation of military conflict.
"I declare should this happen we will leave the games," Sushkevich said. "We cannot possibly stay here in this case."
He said he met with Russian President Vladimir Putin on Thursday night to discuss the situation and request peace during the games.
Suskevich said he did not receive any guarantees but it was important that Putin agreed to listen.
Putin and IOC President Thomas Bach are expected to attend Friday's opening ceremony. Several countries have decided not to send political leaders or dignitaries to the ceremony in protest of Russia's actions in Ukraine.
Ukraine's decision to compete in Sochi was welcomed by the International Paralympic Committee.
"We want sport to prevail and a full complement of teams to compete in what we are confident will be a fantastic Paralympic Winter Games," IPC President Phillip Craven said.
"All week the IPC has been working closely with the Ukrainian Paralympic Committee in an effort to keep them here in Sochi. The talking point of Sochi 2014 needs to be great sport and great athletes, not global politics."
The IPC has appealed for Russia to recognize the U.N.'s Olympic Truce, which asks warring parties to cease hostilities during the Olympics and Paralympics.
About 575 athletes from 45 countries are due to compete in the 10-day Paralympics. Five sports are on the program — alpine skiing, cross-country skiing, biathlon, sledge hockey and wheelchair curling.
Ukraine has entered 23 athletes for the Sochi Paralympics. It finished fifth in the medals table at the Winter Paralympics in Vancouver in 2010, with a total of 19 medals and five gold.
Ukrainian athletes chanted "peace to Ukraine" as they apparently walked out of a flag-raising ceremony in Sochi on Thursday night. That is now under investigation by the IPC as a possible breach of rules banning political protests.
"What we're trying to do is gather the evidence, gather the transcripts and then we will see if any steps are necessary," IPC spokesman Craig Spence said. "If there was a political protest, obviously we'd be disappointed by that because we have said all week that this is about sport, not politics."