The article analyses functioning of vernacular Russian lexemes designating people belonging to the Russian ethnic group in Muscovite Rus in the 16th-17th centuries. The study uses the functional-semantic approach to the analysis of language units. The paper identifies the genre characteristics of texts with the lexemes under analysis, combinability of the ethnonyms, their oppositions, and denotative relatedness of language units. The author hypothesises about preconditions for a gradual formation of the lexeme russkiy (Russian) as of a hyperonym within the group under analysis. The analysis is based on the card-index of "The Dictionary of Vernacular of Muscovite Rus in the 16th - 17th centuries". The author also employs the data of Russian etymological and historical dictionaries. The analysis concludes that all these are ethnonyms that functioned in the vernacular of Muscovite Rus as equal, with cohyponymy between them. The nominalisation of the adjective russkiy (Russian) was promoted by two factors: The adjective had derivative cognate adverbs, and the vernacular showed the tendency to use the noun lyudi (people) in a combination with this adjective in preposition, which resulted in a greater autonomy of the adjective.