Medusa's fantastical it's supposed (7)
I believe the answer is:
assumed
'supposed' is the definition.
(synonyms)
'medusa's fantastical' is the wordplay.
'fantastical' indicates anagramming the letters (a strange or fantastical ordering of the letters).
'medusas' anagrammed gives 'ASSUMED'.
'it's' acts as a link.
(Other definitions for assumed that I've seen before include "Fancied" , "thought" , "Taken as true; adopted" , "Surmised" , "Took upon oneself" .)