[28] Russia and the Luhansk People's Republic (LPR) announced their forces had seized Lysychansk on 2–3 July, although Ukraine initially denied the city's capture.

[4] An initial Russian armored assault on Lysychansk was repelled by the pro-Ukrainian forces, with Belarusian volunteers under Ivan "Brest" Marchuk playing a major role in fighting off the tanks.

According to the Institute for the Study of War (ISW), NASA's Fire Information for Resource Management System also showed "heat anomalies" at the gelatin factory, corroborating reports of military activity there.

The Ukrainian general staff said intensive Russian airstrikes and artillery was aimed at cutting off Lysychansk from the south, but did not mention separatists entering the city.

[45] Amid this Russian breakthrough, the Ukrainian defenders were forced into a disorganized retreat, resulting in many losses, including the death of Belarusian commander Marchuk.

[46] Russian forces entered the Lysychansk Oil Refinery, located at Verkhnokamyanka, around 10 kilometers southwest of the city center, and consolidated their positions, including setting up artillery posts.

[47][failed verification] On 28 June, Rodion Miroshnik, the LPR's ambassador to Russia, claimed that Ukrainian forces in Lysychansk had begun withdrawing from the city.

Ukrainian Su-25 and Su-24m bombers reportedly carried out "up to 10 airstrikes" in the Lysychansk area, striking Russian and LPR logistics centers, fuel depots, and armored combat vehicles.

The British Defence Ministry, in its daily intelligence bulletin, said the clashes were likely centered around the oil refinery and that Ukrainian units in the city proper were holding their positions.

Some civilians interviewed by Crawford blamed the Ukrainian and Western governments for their situation rather than Russia, reflecting a "not insignificant" pro-Russian separatist sentiment in the area.

[54] By 1 July, the Russian defence ministry said its forces had captured the mine and gelatin plant on the city's outskirts, and the northwestern town of Pryvillia as part of their encirclement, along with continued attempts to cut the Lysychansk-Bakhmut highway.

[55][56] On 2 July, governor Serhiy Haidai again noted the incessant, "high density" shelling of Lysychansk, but sought to emphasize that two Russian advances had been repelled in the direction of Verkhniokamyanka and the gelatin plant.

Observers noted that the fall of Lysychansk meant that Russia had achieved its strategic objective of capturing all of Luhansk Oblast, as part of its larger goal of seizing the entirety of the Donbas.

"[65] Later that night, governor Haidai admitted Lysychansk had fallen and president Zelenskyy vowed to eventually retake the city, "thanks to the increase in the supply of modern weapons.

"[66] After the fall of Lysychansk, Russia declared full control over the entirety of Luhansk Oblast and President Vladimir Putin ordered a brief reprieve for the fighters that fought along that front.

However, Luhansk governor Serhiy Haidai denied that all of the province had been captured and said that there were ongoing clashes in villages and towns on the western outskirts of Lysychansk, on the approach to Siversk.

Beale also noted that Ukrainian officials were "unusually quiet" on 3 July about fighting in the city, possibly not wanting to broadcast any tactical retreat for operational security reasons.