If the metric on the submanifold $M$ is not induced by the Euclidean innner product on $\mathbb{R}^n$, with respect to which the Euclidean gradient $\nabla f$ is defined, then the answer is no: it is possible for the gradient (with respect to $g$) of the function $f|_{M}$ to be different than the projection of $\nabla f$ onto the tangent space of $M$.
A simple example is obtained as follows: consider the embedding of $M=\mathbb{R}$ into $\mathbb{R}^2$ as the $x$-axis: $ x_1\in M \mapsto (x_1,0) \in \mathbb{R}^2$; endow $M$ with the Riemannian metric $g = 2 dx_{1}^{2}$; Let $f$ be the function $f(x_1,x_2)=(x_{1})^{2}$.
With respect to the Euclidean metric $h = dx_1^2 + dx_2^2$ on $\mathbb{R}^2$, the gradient of $f$ at a point $(x,0) \in M$ is $\nabla f (x,0) = 2x\frac{\partial}{\partial x_1}$. Its projection to the tangent space of $M$ at $(x,0)$ is itself.
Meanwhile, the gradient of $f|_{M} (x_1) = (x_{1})^{2}$ at the point $x$, with respect to the metric $g$, is the vector field $x\frac{\partial}{\partial x_1}$.
By its simple nature this example might mislead one to think that a difference in scaling is perhaps all there is to it. This is not the case. In fact, using embeddings of surfaces in $\mathbb{R}^3$ it is possible to construct metrics on $M$ such that the intrinsic gradient $\nabla_M f|_M$ and the projection of the extrinsic gradient $\nabla f$ onto the tangent space of $M$ are linearly independent (try constructing such metrics on embeddings of the plane into $\mathbb{R}^3$ as the $x,y$-plane by yourself). This highlights the metric-dependent nature of the gradient.