Medina was created a Cardinal-Deacon in the consistory of 21 February 1998, with the title of San Saba. He was Prefect of the Congregation for Divine Worship and the Discipline of the Sacraments from 23 February 1998, until his retirement on 1 October 2002. Medina was one of the cardinal electors who participated in the 2005 papal conclave. Following the conclusion of the conclave, as Cardinal Protodeacon, he announced to the world the election of Pope Benedict XVI. He was the first non-Italian to do so in centuries and the first Latin American. As protodeacon, Medina imposed the pallium on Pope Benedict XVI and was one of the three cardinals who made the public act of obedience to the new pope at the papal inauguration. In retirement he returned to Chile in order to work as a parish priest.
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In December 2008, at a Mass marking the second anniversary of the death of Augusto Pinochet, Medina condemned pop musician Madonna, who was appearing in Santiago. He said "The atmosphere in our city is pretty agitated because this woman is visiting and with incredibly shameful behavior provokes a wild and lustful enthusiasm."
Regarding the prominent 80-year-old priest Fernando Karadima, whom in January 2011 the Congregation for the Doctrine of the Faith, finding him guilty of having sexually abused minors, ordered to retire to a life of prayer and penitence and never to exercise the priesthood in public again, and who was then accused under Chilean civil law of sexual abuse of minors, Medina doubted that he would be sent to prison, since homosexual activity was not a crime in Chilean civil law and use of the term "sexual abuse" could be questioned: "With all due respect to the laws of my country, a child of 8 or 9 is very different from a 17-year-old... A 17-year-old youngster knows what he is doing." He also remarked that priests are not immune from the devil's works: "Any informed Christian knows we are prone to weakness because of our human fragility. The devil gets in where he can. Priests are not immune from his snares." He defended the canonical sanctions imposed on Karadima as being the heaviest that could be imposed short of laicization, and as having taken into account Karadima's age and merits. One of Karadima's accusers called the cardinal's remark about 17-year-olds "an unwarranted attack". Another added that it was an attack not only on those who had denounced Karadima, but on all who were honestly looking for truth and justice for their lives. He regarded Medina's statements as "extremely suspicious, as if he wanted to diminish the outline of these grave actions, reducing the issue to homosexuality in a very silly manner, as if, furthermore, homosexuality and abuse were synonymous". The statements, he said, "were an attempt to free from responsibility someone who took advantage of his position of power over more vulnerable persons".