Sometimes known as "The Little Stalingrad of the North", the Soviet forces encircled the city on 27 November 1942, but were unable to make much progress against German units further west nor retake a key railway to Leningrad.

As part of Operation Barbarossa, the German army took Velikiye Luki on 19 July 1941, but was forced to retreat the next day due to Soviet counter-attacks breaking the line of communications in multiple places.

Army Group Centre's commander asked the OKH for permission to conduct a breakout operation while the situation was still relatively fluid by pulling the German lines back by around ten miles (16 km).

Due to Army Group Centre's commitments at Rzhev, the only resources immediately available to man the lines opposite Velikiye Luki were those already in the area, which were organised as Gruppe Wöhler (291st Infantry Division).

Throughout December, the garrison – which maintained radio contact with the relief forces – held out against repeated Soviet attempts to reduce their lines, and in particular the rail depot in the city's southern suburb.

The Soviet forces, attacking strongly entrenched troops in severe winter weather, suffered extremely high casualties, while conditions in the city steadily deteriorated despite airdrops of supplies, ammunition and equipment.

An attempt by the Germans to reach Velikiye Luki in late December ran into stubborn Soviet defence and halted, heavily damaged.

After the war, the Soviet authorities collected a representative set of Germans of various ranks from general to private who had fought at Velikiye Luki from prisoner-of-war camps and brought them to the city.

Furthermore, the rail lines from Velikiye Luki led directly into the rear of Vitebsk, a critical logistics hub for Army Group Centre.

While it is somewhat difficult to separate the actions of various Red Army and Wehrmacht units within the flurry of movements involved in the larger scope of the Soviet operations, for the most part these below are derived from Glantz and Isayev.