After President Ilham Aliyev said on Sunday that his country's forces had taken Shusha, the second-largest city in the Nagorno-Karabakh enclave, Azeris celebrated on the streets of Baku, but Armenian officials denied the city had been captured.
Shusha, which is called Shushi by Armenians, is of cultural and strategic importance on both sides and is located 15 km (9 miles) south of the largest city of the enclave, Stepanakert.
In almost six weeks of fighting in and around Nagorno-Karabakh, a mountainous enclave that is internationally recognized as part of Azerbaijan but populated and controlled by ethnic Armenians, at least 1,000 people have died.
"(This day) will become a great day in the history of Azerbaijan," said Aliyev, announcing that Shusha / Shushi had been taken by Baku's troops.
Azeris gathered in large numbers in Baku to celebrate, waving flags and chanting slogans, while their car horns were sounded by drivers.
Aliyev's statement was denied by officials from the Nagorno-Karabakh region and Armenia's Ministry of Defense.
"For Azerbaijan, Shushi remains an unattainable pipe dream. The fortress city resists the blows of the enemy, despite heavy destruction," said the Nagorno-Karabakh Rescue Service.
The Ministry of Defense of Armenia said heavy fighting for the strategic site continues, while the Nagorno-Karabakh Defense Army said it had repelled the Azeri side's multiple attempts to advance on the city.
Azerbaijan, emboldened by Turkish support, has the upper hand in the bloodiest fighting in the South Caucasus in over 25 years. It has recovered much of the land in and around Nagorno-Karabakh in just over a month that it lost in the 1990s in a previous war over the territory.
On Sunday, Turkish leaders congratulated Azerbaijan.
"I applaud the Shusha victory of my Azeri brothers ... I believe (it) is a sign that the rest of the occupied lands will soon be liberated too," said Turkish President Tayyip Erdogan, addressing the crowds in the northwestern Kocaeli province of Turkey.
The town could serve as a key staging post for an Azeri assault on Stepanakert, the largest town in the enclave. In recent days, both have come under heavy shelling. The Defense Ministry of Azerbaijan said that allegations that it had shelled civilian areas were 'misinformation.'
Thomas de Waal, an analyst at the Carnegie Endowment for International Peace, said the town is also culturally important to both parties.
Before the previous conflict, its population was primarily made up of Azeris, making it historically significant for Azerbaijan. For Armenians, it is the site of the cathedral of Karabakh, de Waal said.