The siege of Stepanakert started in late 1991, during the First Nagorno-Karabakh War, in Stepanakert, the largest city in Nagorno-Karabakh, when the Azerbaijani forces circled the city. Until May 1992, the city and its Armenian population were the target of a months-long campaign of bombardment by Azerbaijan. The bombardment of Stepanakert and adjacent Armenian towns and villages, which took place under the conditions of total blockade by Azerbaijan, caused widespread destruction and many civilian deaths.

Human Rights Watch reported that the main bases used by Azerbaijani Armed Forces for the bombardment of Stepanakert included the towns of Khojaly and Shusha. Azerbaijani forces used weapons such as the BM-21 Grad multiple-launch rocket systems. The indiscriminate shelling, sniper shooting and aerial attacks killed or maimed hundreds of civilians and destroyed homes, hospitals and other buildings that were not legitimate military targets, and generally terrorized the civilian population. As a result of the offensive launched by Azerbaijan on Nagorno-Karabakh, more than 40,000 people became refugees and dozens of villages were burnt and ruined.

According to Memorial Human Rights Center, the residential areas of both Stepanakert and Shusha were shelled on a regular basis with the use of artillery and rocket launchers. There were more destruction and casualties in Stepanakert than in Shusha, which could be explained by location of Stepanakert in the lowland and much higher intensity of shelling from Shusha due to Azerbaijan's capture of Soviet depots in Aghdam and other locales with more than 11,000 wagons full of rockets, including those for BM-21 MLRS.

The siege of the city stopped only after the capture of Shusha by Armenian forces on May 8–9, 1992.

Stepanakert is a city located on Karabakh Plateau at the center of the Nagorno-Karabakh, a mountainous and landlocked region situated in the South Caucasus. Although Armenian sources state that the settlement was first mentioned as Vararakn (Armenian: Վարարակն, meaning "rapid spring"), named after the river flowing through it, Azerbaijani references generally say that the settlement was founded in the late eighteenth century as a private residence for khans of the Karabakh Khanate, and was thus called Khankendi (Azerbaijani: Xankəndi, literally "the khan's village").

After the establishment of the Soviet authority, Khankendi was renamed Stepanakert (Armenian: Ստեփանակերտ, literally "the city of Stepan") by the decree of the Central Executive Committee of the Azerbaijani SSR, dated August 10, 1923, to honour Stepan Shaumian, leader of the 26 Baku Commissars. After that, Stepanakert was made the capital of the Nagorno-Karabakh Autonomous Oblast (NKAO) and gradually became a chief city for the Armenians in the region. According to the 1979 Soviet census, the city had a population of 38,980 people, mostly of Armenians, who constituted 87% of the total population, and more than four thousand Azerbaijanis.

In September 1988, a mass looting and pogrom took place, directed against the ethnic Azerbaijani population of the city, known as the Stepanakert pogrom. As a result, the city's Azerbaijani population fled the city.

Azerbaijan blockaded railroad lines and the delivery of oil and natural gas to Armenia and Nagorno-Karabakh since 1989. Since the fall of 1991 the imposed blockade became full and continuous. The blockades shattered the Armenian economy, sparked social unrest and created a devastating humanitarian crisis. Throughout the spring of 1992, Stepanakert (which had fifty five thousand inhabitants) was under siege – Azerbaijan had cut all the land communication between Armenia and Nagorno-Karabakh. Stepanakert had no access by road to Armenia for almost two years and its only link to the outside world was by helicopter across the mountains to Armenia. Thus many of its residents had been virtually trapped there all that time.