Ukraine's military says it has withdrawn its troops from Avdiivka - the key eastern town for months besieged by Russian forces.
Ukraine's Commander-in-Chief Oleksandr Syrskyi said he acted "to avoid encirclement and preserve the lives and health of service personnel".
He added that the troops were moved to "more favourable lines".
His deputy said the Russians had a huge artillery advantage, and were advancing "on the corpses of their own soldiers".
Avdiivka - a gateway to the Russian-seized city of Donetsk - has been engulfed in fierce fighting for months, and is now almost completely destroyed.
It has been a battlefield town since 2014, when Russian-backed fighters seized large swathes of the eastern Donetsk and Luhansk regions.
The fall of Avdiivka marks the biggest change on the more than 1,000km-long (620-mile) front line since Russian troops seized the nearby town of Bakhmut in May 2023.
Russian President Vladimir Putin launched a full-scale invasion of Ukraine on 24 February 2022.
In a statement on Facebook early on Saturday, Gen Col Syrskyi said his decision was based on "the operational situation around Avdiivka".
"Our soldiers performed their military duty with dignity, did everything possible to destroy the best Russian military units, inflicted significant losses on the enemy in terms of manpower and equipment."
Gen Syrskyi - who was only appointed as the country's top commander a few days ago - said Ukrainian troops were "taking measures to stabilise the situation and maintain our positions".
In a separate statement soon afterwards, one of his deputies said the troops had already left Avdiivka to "pre-prepared positions".
"In a situation where the enemy is advancing on the corpses of their own soldiers, with a ten-to-one shell advantage, under constant bombardment, this is the only correct solution," Gen Oleksandr Tarnavskyi added.
US National Security Council spokesman John Kirby had earlier warned that Avdiivka was "at risk of falling into Russian control".
He said this was largely "because the Ukrainian forces on the ground are running out of artillery ammunition".
"Russia is sending wave after wave of conscript forces to attack Ukrainian positions," he said.
"And because Congress has yet to pass the supplemental bill, we have not been able to provide Ukraine with the artillery shells that they desperately need to disrupt these Russian assaults."
Earlier this week, the US Senate approved a $95bn (£75bn) foreign aid package - including $60bn for Ukraine - after months of political wrangling, but it faces an uphill battle in the House of Representatives.
Ukraine is critically dependent on weapons supplies from the US and other Western allies to keep fighting Russia - a much bigger military force with an abundance of artillery ammunition.
Nato Secretary General Jens Stoltenberg warned on Thursday that the US failure to approve continued military assistance to Ukraine was already having an impact on the battlefield.
Russian troops have been making significant gains in Avdiivka recently, threatening to encircle it.
Earlier this week some Ukrainian soldiers privately admitted the town could fall at any moment.
"We're upset," Ukrainian officer Oleksii, from Ukraine's 110th Mechanised Brigade in the Avdiivka area, told the BBC, standing beside a huge mobile artillery piece as Russian guns boomed in the distance.
"Currently we have two shells, but we have no [explosive] charges for them… so we can't fire them. As of now, we have run out of shells," said Oleksii.
Note how multiple sources in the article blame it on the lack of artillery. This is being framed as Ukraine being the underdog, and they are, but this wasn't always the case, they used to have the edge on artillery. All this is the consequences of the inevitable, I find myself quoting, again, this lib piece from 2 months ago, to wit:
So the chickens are coming home to roost. Ukraine's "allies" are treating this as yet another foreign aid programme where they overpromise and underdeliver, and then sour when the ungrateful recipients are squandering their gifts because they're too stupid, greedy, lazy, etc. While Russia's allies are, you know, sending them war supplies.
I heard this all the time, but is there even any proof of that? I mean it would be logical since DPRK have huge stockpiles of exactly the same shells Russia use and we seen significant warming between Moscow and Pyongyang after 2022 but is there any proof? Especially for Iran where such massive ammo deliveries would be easily spotted because they would have to ship it either through Caspian Sea or multiple other countries.