Azerbaijan President Ilham Aliyev claimed his forces have liberated Shusha.
He said: ‘With great pride and joy, I inform you that the town of Shusha has been liberated.’
However, Armenian defence ministry said fighting in and around Shusha was continuing.
Shusha is the second-largest city in Nagorno-Karabakh enclave.
It has been under the occupation of Armenian forces since 1991.
Aliyev’s claim set off widespread celebrations in capital Baku.
Azeris gathered in large numbers waving flags and chanting slogans.
Aliyev vowed to continue fighting until Armenia withdrew from the territory.
The ex-Soviet nations have been engaged in a conflict over Nagorno-Karabakh for decades.
The recent fight erupted on September 11.
It has intensified since with the two nations violating a truce.