Defender Santiago Ostolaza headed the winner in the 74th minute to take Racing level on seven points with leaders Corinthians of Brazil in Group One. The pair are now firm favourites to progress to the knockout stages.
Medellin, who had forward Edison Gimenez sent off in the 84th minute for punching an opponent, are in third place on three points with only two games to play.
Racing have never won the Uruguayan championship and spent long periods in the second division. Some 3,000 fans watched the game in Montevideo's huge Centenario stadium.
The Libertadores has been littered with surprises over the last few years following a shift in the balance of power away from the traditionally successful clubs.
Argentina's Velez Sarsfield came from behind to beat Chile's Colo Colo 2-1 in a meeting of former champions in Group Seven.
Ezequiel Miralles gave Colo Colo an early lead but goals from Uruguayan pair Rodrigo Lopez and Santiago Silva put Velez in front before the half hour.
The visitors had Rodrigo Millar sent off in the 87th minute.
Velez went top with 10 points from four games, three ahead of Cruzeiro, and Colo Colo are third with four.
Michael Arroyo gave Deportivo Quito a 1-0 win at home to fellow Ecuadoreans Emelec in Thursday's other match, condemning their opponents to a third successive defeat in Group Five.
Deportivo are third with four points from three games.
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