Yes. In fact, there is even @import to use in your <style> tag. Using <link /> for external CSS with internal CSS is fine too.
When using LINK, make sure that the syntax matches the DOCTYPE you are using. If you're using HTML, it should be <link> - for XHTML (even if served as HTML) it should be <link /> (as krt had demonstrated). Just beware of the "Cascade"-ing part of "Cascading Style Sheets" when mixing styles though. Inline styles (those in the HTML file) will always trump external files (those served in a separate file), unless you use !important (and even then, some browsers may ignore it anyway). If you have a linked stylesheet and an embedded stylesheet, whichever one comes LAST will over-ride the earlier stylesheet if any of the rules in both match up (for example, if you link to a stylesheet that says all paragraphs must have red text and a white background, and then have an embedded stylesheet that says all paragraphs must have blue text on a green background, then all the paragraphs will have blue text on green backgrounds).