Obama expressed frustration with Iran's failure to give an answer three weeks after it received a UN-brokered offer aimed at defusing the stand-off, while Medvedev suggested that even Russian patience was now wearing thin.
"Unfortunately, so far at least, Iran has been unable to say yes" to the proposal, Obama said after talks with Medvedev at the Asia-Pacific Economic Cooperation (APEC) summit in Singapore.
"We now are running out of time with respect to that approach," said Obama.
Russia, which has the strongest ties with Tehran of any big power, has traditionally been unwilling to punish Iran with tough measures. But Medvedev said that Tehran risked sanctions if the crisis continued.
He said Moscow was "not completely happy about the pace" of efforts to resolve the crisis.
"In case we fail, the other options remain on the table, in order to move the process in a different direction," he said in a reference to new UN sanctions against Tehran.
"As reasonable politicians, we understand that any process should have a final point. The process of talks exists not for the pleasure of talking but for achieving practical goals."
Russia, like the United States, is a veto-wielding UN Security Council permanent member, and its support is crucial if US warnings of tough sanctions against Tehran are to carry weight.
China is another permanent council member, and US officials say Iran is likely to figure in discussions this week between Obama and President Hu Jintao in Beijing.
Russia also has unmatched leverage as it is building Iran's first nuclear power plant in the southern city of Bushehr, and has an as-yet unfulfilled contract to deliver advanced air defence missiles to Tehran.
Medvedev's comments were stronger than his most recent statement on the nuclear crisis when he told the German magazine Der Spiegel earlier this month that sanctions could not be excluded.
Obama described as "fair" the proposal offered to Iran, which would see states — including Russia — help Tehran to further enrich Iranian uranium for delivery to a research reactor.
Referring to sanctions, he said that "we will begin to discuss and prepare for these other pathways" as Tehran could not be counted on to fulfil its international obligations.
The US president exchanged a warm handshake with Medvedev at the conclusion of the talks, their fourth meeting since Obama came to power.
"I have found, as always, President Medvedev frank, constructive and thoughtful," he said.
"The reset button has worked," he said, using an administration slogan used to symbolise the revival of US-Russian ties after years of mutual distrust under George W. Bush.
White House spokesman Robert Gibbs hailed the meeting with Medvedev, saying: "We are in a position with our partners all working together in a way that we have not previously been."
The West suspects Tehran is trying to develop a nuclear weapon under cover of its civilian nuclear energy programme. Iran vehemently denies the claims while Russia has said there is no evidence to support the accusations.
French Foreign Minister Bernard Kouchner also voiced frustration at Iran's slowness to respond to the UN-brokered deal, in an interview with Israeli newspaper Yediot Aharonot.
"In practice, the answer has almost been given and it is negative. That is a shame, a shame, a shame," Kouchner said.
"None of those meetings were particularly successful. We are waiting. It isn't good, and it is very dangerous."
France has suggested that Tehran has until December to show progress before sanctions are examined. But top White House Russia adviser Mike McFaul said there was no discussion of "specific timetables" in the Medvedev meeting.
"We're exactly on the same page with the Russians in terms of what we're doing in one track and what we may need to do in the other track," he said.
