He was appointed to head the 3rd East Siberian Brigade (1899–1903), and distinguished himself for his role in the suppression of the Boxer Movement of 1899–1901 in Qing China, being wounded in combat during the Battle of Tientsin in July 1900.

Imperial Russia had occupied Port Arthur from 1897, and had heavily enhanced and modernized its defenses in the intervening years – its position was considered[by whom?]

The Russo-Japanese War of 1904-1905 started in February 1904; Stessel was promoted to governor of the Kwantung Military District in March 1904, and Lieutenant General Konstantin Smirnov was appointed as his successor at Port Arthur.

He also ignored orders from General Aleksei Kuropatkin (the commander-in-chief of the Russian land forces in Manchuria) to leave Port Arthur on a destroyer on 3 July 1904.

On 31 December 1904 a series of mines were exploded under Fort Sungshu, Port Arthur's sole surviving major fortress, which surrendered that day.

While the Japanese interned the surviving men and officers of the Russian garrison at Port Arthur as prisoners-of-war, they allowed Stessel to return to St. Petersburg in comfortable quarters on a British passenger-liner.