The shadowy Wagner Company plans to pull out of Bakhmut amid infighting between its director and the Russian Defence Ministry.
Yevgeny Prigozhin confirmed the plan in a social media post which shows a video of him walking among the bodies of his dead fighters.
The former jailbird says thousands of his fighters will leave on May 10 - in a suspected blow to Moscow’s war campaign as it prepares for a Ukraine counter-offensive.
He said in a statement: "I declare on behalf of the Wagner fighters, on behalf of the Wagner command, that on 10 May, 2023, we are obliged to transfer positions in the settlement of Bakhmut to units of the defence ministry and withdraw the remains of Wagner to logistics camps to lick our wounds.
"I'm pulling Wagner units out of Bakhmut because in the absence of ammunition they're doomed to perish senselessly."
The guns-for-hire firm has been dubbed “Putin’s private army” but has infuriated the Kremlin in recent months after Prigozhin criticised Moscow’s military commanders.
Wagner has lost many thousands of troops in bitter fighting for Bakhmut but has complained regularly about lack of support from Moscow.
The group is also suspected of having committed war crimes since the invasion on February 24 last year - and elsewhere in Africa.
Wagner has played a major role in stamping Russia’s footprint in North Africa, in particular in Libya and also in Syria, where it has back the Assad regime.
But the withdrawal is a shift in Moscow’s war in Ukraine as it has led the way in Bakhmut, the scene of the bloodiest battles, despite having failed to completely take the town.
The group has also made the most sacrifices in Bakhmut, sometimes losing 1,000 men in one day, because of Ukraine’s ferocious resistance.
Mr Prigozhin has hit out at top defence chiefs for losses suffered by his Wagner Group fighters in Ukraine.
It has reignited and escalated a long-running feud with Defence Minister Sergei Shoigu and Chief of General Staff Valery Gerasimov.
Mr Prigozhin appeared on film next to dozens of bodies that he said were those of Wagner fighters.
He said: "We have a 70% shortage of ammunition. Shoigu! Gerasimov! Where is the ******* ammunition?”
"These are Wagner lads who died today. The blood is still fresh.”
In his most aggressive video yet, he adds: "Look at them, you b*****s! [...] You sit in expensive clubs [...] your children make YouTube videos [...] you think you have the right to dispose of their [Wagner fighters] lives [...] they came here as volunteers and died so you could gorge yourselves in your offices.”
Prigozhin began rowing with defence chiefs last year, accusing them of incompetence, and of deliberately depriving Wagner of ammunition.
