At least 16 people on both sides were killed in three days of shelling that started Sunday between the ex-Soviet republics, which have been locked for decades in a conflict over Azerbaijan's separatist region of Nagorny Karabakh.
The territory was seized by ethnic Armenian separatists in a 1990s war that claimed 30,000 lives, though this week's fighting took place on the countries' northern border, far from Karabakh.
Armenian defence ministry spokeswoman Sushan Stepanyan said Wednesday that the situation was "calm overnight," while the foreign ministry said clashes had stopped during the night.
Azerbaijan's defence ministry said that "military action halted at midnight" and the lull in fighting continued throughout the day Wednesday.
Eleven Azerbaijan troops and one civilian were killed in the clashes, as well as four Armenian troops, the countries said.
The fighting prompted calls for an immediate de-escalation from the United States, European Union and regional power broker Russia.
Azerbaijan's ally, Turkey -- which competes with Russia for the geopolitical influence in the Caucasus region -- backed Baku, vowing to "stand by Azerbaijan in its struggle to protect its territorial integrity."
Armenia's foreign ministry slammed the comments saying Turkey's "provocative and biased stance" threatened hopes for peace.
Armenian Prime Minister Nikol Pashinyan has blamed Azerbaijan for initiating the military flare up.
On Wednesday, however, Azerbaijani President Ilham Aliyev accused Armenia of an "act of aggression" in a letter to his Turkish counterpart Recep Tayyip Erdogan.
War 'unlikely'
Analysts said an all-out war between the Caucasus neighbours could pit regional rivals Russia and Turkey against each other.
"Any direct territorial intrusion by either party will, with high probability, draw Russia and Turkey into the military confrontation," Olesya Vartanyan of the International Crisis Group told AFP.
But she said the prospect of full-scale war erupting in the area distant from Karabakh -- where neither party has territorial claims -- was very low.
"The probability of the hostilities' spill-over to Karabakh is also unlikely," she said.
Armenia, which controls the disputed region, is content with the status quo in Karabakh and the Kremlin has leveraged the conflict to exert its influence over the ex-Soviet republics as a power-broker.
Russia also maintains a military base in Armenia, which is a member of a Moscow-led military alliance of former Soviet countries. But the Kremlin supplies both Yerevan and Baku with sophisticated weapons.
Internationally mediated peace talks between the two Caucasus nations have so far failed to bring about a solution to the territorial dispute.
Energy-rich Azerbaijan has repeatedly threatened to win control over Karabakh by force after seeing diplomatic efforts to reclaim the territory fail.
Vartanyan said that Armenia was holding strategic positions along the frontline in Karabakh which would "hamper an Azerbaijani offensive".
Armenia has vowed to crush any military offensive.