Two key figures from the all-powerful Kremlin administration moved with Putin to take up new roles in the White House, the riverside seat of Russia's government.
Sergei Sobyanin, a former governor of the oil-rich region of Tyumen who headed the Kremlin administration under Putin, becomes the new premier's chief of staff and one of five deputy prime ministers.
Igor Sechin, formerly a deputy head of the presidential administration and a key Kremlin hardliner with close ties to the security services, becomes another of the five deputy prime ministers, tasked with overseeing industry and energy.
Analysts said the combination of key Kremlin figures and influential serving ministers made Putin's administration unusually strong. Under Russia's 1993 constitution, presidents have dominated with prime ministers usually being weak figures.
State-controlled oil major Rosneft strongly outperformed the stock market, with gains of 4.5 percent, in a performance which underlined the close ties between the Kremlin and business.
Traders attributed the rise to the promotions of Sechin and Naryshkin, who were also Rosneft chairman and deputy chairman respectively.
Former prime minister and ex-collective farm boss Viktor Zubkov continued in the cabinet as one of two first deputy prime ministers - the most senior posts after Putin's. The other was Igor Shuvalov, who was Putin's top economic aide at the Kremlin.
"Overall, there are no surprises," said Yevgeny Gavrilenkov, chief economist at Moscow brokerage Troika Dialog.
"It is no doubt a positive sign that Kudrin, known for his conservative policies, has stayed ... It is logical that people who worked with Putin in the presidential administration moved to the government."
Among the few major changes were the removal of Telecoms Minister Leonid Reiman, who has repeatedly denied media reports that he indirectly owns a major stake in Russia's number three mobile operator Megafon.
Medvedev's other two key appointments were the naming of former FSB spy service chief Nikolai Patrushev, a Putin ally, to run Russia's powerful Security Council and the promotion of FSB deputy chief Alexander Bortnikov to replace Patrushev.
Bortnikov was previously head of the FSB in Putin's home city of St Petersburg.
Under Russia's constitution, the prime minister proposes cabinet names to the president, who must approve them before they are final.
