Armenian Prime Minister Nikol Pashinyan said he signed a deal with the leaders of Azerbaijan and Russia to end the conflict over Nagorno-Karabakh on Tuesday morning.
The declaration followed six weeks of heavy fighting and advancement by the Azerbaijan's forces.
Baku said on Monday it had seized dozens more settlements in Nagorno-Karabakh, a day after claiming the capture of the enclave's strategically positioned second-largest city.
Nagorno-Karabakh is in Azerbaijan but has been under control of ethnic Armenian forces backed by Armenia.
Russian state agencies confirmed the news. There was no official immediate reaction from Baku.
"I signed a statement with the presidents of Russia and Azerbaijan to end the Karabakh war," Mr Pashinyan said on social media.
"The text of the already published statement is inexpressibly painful for me personally and for our people.
"I made this decision as a result of deep analysis of the military situation and the assessments of people who know it best.
"This is not a victory but there is not defeat until you consider yourself defeated.
"We will never consider ourselves defeated and this shall become a new start of an era of our national unity and rebirth."
He said he would give more details “in the coming days”.
The seizure of Shusha city, which Azerbaijani President Ilham Aliyev claimed a day earlier, was the most significant military development since fighting between the two countries over Nagorno-Karabakh restarted in September.
Also on Monday, Azerbaijan said it shot down a Russian helicopter over Armenia, far from the fighting. Two Russian servicemen were killed.
The incident occurred about 70 kilometres away from Nagorno-Karabakh, but Azerbaijan said the war was a contributing factor.