Lipnitskaia produced a near-flawless skate as she combined soaring jump combinations with dazzling spins to wow the judges who rewarded her with 209.72 points.
She beat compatriot Adelina Sotnikova, who had a narrow lead after the short programme, by more than seven points. Sotnikova paid the price for failing to land a triple lutz cleanly.
Italy's Kostner, the 2012 world champion, will have to improve drastically to have any hope of winning an Olympic medal after trailing a distant third with 191.39 points.
(Writing by Pritha Sarkar in London; editing by Ken Ferris)
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