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Edgy, outspoken director Kirill Serebrennikov has been put under house arrest as an investigation continues into allegations he embezzled $1.5 million of government money, some of which was earmarked for a play investigators say was never produced.
Serebrennikov previously labelled the accusations "absurd".
He defended himself at the pre-trial hearing as an "honest" man who had cooperated with the investigation.
His lawyer argued he posed no flight risk and read out the names of 34 prominent figures in the arts scene who had offered to stump up bail on the director's behalf.
Hundreds gathered outside to support Serebrennikov, many of them part of the cultural elite, concerned his arrest was part of a broader attack on the arts in the country.
"Shame" they yelled repeatedly, clapping to a crescendo as dozens of police officers tried to keep them from bulging off the pavement and onto the road.
Serebrennikov has won acclaim for his satires that poke fun at the authorities as well as productions that consider the seamier side of Russian society.
His film, The Student, focused on religious extremism in the country and won a prize at the Cannes film festival last year.
"Kirill is one of the brightest, most-talented directors," internationally renowned writer Lyudmila Ulitskaya said.
"I'm here to express my support. It's a very unfair, cruel and vile situation."
Like many here, Ulitskaya is convinced the fraud charges brought against Serebrennikov amount to a government attempt to pressure an artist.
The Minister for Culture, Vladimir Medinsky, previously batted away the speculation, saying he knew "for sure" this wasn't a stitch up.
"I have a source", he said.
This is a politically sensitive time however. And with the presidential ballot due in March next year, some think Serebrennikov's arrest is an attempt to send a message that new, more-restrictive boundaries are being drawn about what's acceptable and what's not.
If it is a signal, it's not the first Serebrennikov has received from the authorities.
In July, a ballet he directed about gay Soviet ballet dancer Rudolf Nureyev, who defected to the West, was canned just days before the premiere. The show was to be performed at the Bolshoi theatre.
Officials said the production wasn't ready, but critics believe the themes involved were simply too sensitive.
"Two visions of Russia's future are competing." Alexander Baunov of the political think tank the Carnegie Centre said.
"One is about a more globalised, open, tolerant and diverse Russia — another is a Russia more mobilised around it's uniqueness and its confrontation with the West.
"The latter … believe everything that comes from the West is dangerous for Russia as a country with what they think is a special civilisation. Serebrennikov represents for them this very colourful, free kind of artist who bridges the gap between Russia and the world."
The director will not be able to use the phone or receive messages while under house arrest.
The restrictions will remain in place until at least the October 19, pending the ongoing investigation.
Topics: arts-and-entertainment, theatre, government-and-politics, crime, gays-and-lesbians, russian-federation
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