Fighting in what was a dormant conflict for two decades flared up over the weekend with at least 30 troops killed on both sides.
The defense ministry said in a statement Sunday that, in response to pleas from international organizations, it will be unilaterally "suspending a counter-offensive and response on the territories occupied by Armenia."
The ministry added that it will not focus on fortifying the territory Azerbaijan has "liberated," the Associated Press reported.
Nagorno-Karabakh has been under the control of local ethnic Armenian forces and the Armenian military since a war ended in 1994 with no resolution of the region's status. The conflict is fueled by long-simmering tensions between Christian Armenians and mostly Muslim Azeris.
The Azerbaijan Republic's Defense Ministry had announced in a Saturday statement that Armenian troops opened fire 127 times along the border over a 24-hour period using mortars and heavy artillery shells that struck civilian regions.
Earlier, Azerbaijan had announced that 12 of its troops had been killed with Armenia saying that 18 soldiers lost their lives in the violence which started overnight Friday.