The 15-year-old Zagitova, who won the Grand Prix Final last month while her training partner Medvedeva was sidelined with a fractured foot, was rewarded with a score of 80.27 points for her short program which featured a cleanly-executed triple Lutz-triple loop combination.
Medvedeva, who has not lost a competition for more than two years, finished second with 78.57 points after stepping out of her double Axel.
"I'm not pleased with my performance today but I still have time to make adjustments," said Medvedeva, who grimaced at the end of her skate.
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"My foot recovered very quickly. I never thought I would say this but I am glad that I have felt that this is my sport. I missed the competitions and training. It was a difficult period."
Trailing Zagitova by only 1.7 point, the 18-year-old Medvedeva is still in the running to secure a third consecutive European title following Saturday's free skate.
Medvedeva topped the podium at last year's Grand Prix events in Moscow and Osaka but missed the Grand Prix Final because of a cracked bone in her right foot.
The injury also prevented her from competing at last month's Russian national championships.
Italy's Carolina Kostner, a five-times European champion, finished third with 78.30 points despite a slight error on her triple toeloop.
"I am very happy with my performance," Kostner told a news conference. "I felt grounded and serene."