In an interview with German weekly Der Spiegel, Medvedev confirmed Russia was prepared to help with work in enriching Iranian uranium if Tehran agreed to a UN-brokered plan to break the deadlock.
"If the Iranian leadership takes a less constructive position, then in theory anything is possible," Medvedev said in the interview, a full transcript of which was released by the Kremlin.
He said that he had discussed this with US President Barack Obama on the sidelines of the UN General Assembly in New York in September.
"I do not want that all this ends up with the adopting of international sanctions because sanctions, as a rule, lead in a complex and dangerous direction.
"But if there is no movement forward then no-one is going to exclude such a scenario."
Russia — a permanent veto-wielding member of the UN Security Council — is seen as a key player in the Iranian nuclear crisis due to its close political and economic ties with Tehran.
It is also building the country's first nuclear power station in the southern city of Bushehr.
Medvedev said that Iran had every right to a peaceful nuclear programme under the observation of the UN nuclear watchdog.
But the existing rules had to be observed, "without trying to hide away any objects," he said, in apparent reference to Iran's secret enrichment facility that it only recently declared.
The United States has been seeking a concrete commitment from Moscow on tough sanctions against Tehran should the current diplomacy fail, but Russia has yet to make such a statement.
Some Western powers have spoken of a December deadline for Tehran to show signs of progress.
