Medvedev said during a tour of a weapons manufacturing plant that Russia needed to pick up the pace in terms of rearmament.
The government, he said, has set aside $750 million to produce the Iskander mobile tactical ballistic missile system.
"The Iskander M is without doubt one of the most effective systems in its class and, in our opinion, is ahead of foreign analog," Medvedev was quoted by Russia's state-run news service RIA Novosti as saying.
Washington and its allies say a missile defense shield in Europe would counter regional aggression for adversaries such as Iran. Russia says it views the plan as a threat to its national security, warning it may take corresponding action along its western border.
NATO leaders, during their annual meeting in May, issued a proclamation saying the "appropriate mix of nuclear, conventional and missile defense capabilities" was vital for the security of the alliance.
The Kremlin said it would deploy the Iskander system to its western borders should NATO deploy a missile defense system in Poland. The Russian system is designed to strike high-value targets like rival missile systems and command posts.