The aircraft took off from Baku International Airport at 07:55 Azerbaijan Time (UTC+04:00) on a flight to Grozny Airport. According to flight tracking service Flightradar24, the aircraft was "exposed to strong GPS jamming and spoofing" while flying near Grozny. GPS jamming has been a known issue on long-haul flights and has been encountered while entering Russian airspace. Multiple checklists were made to handle such jamming.

The aircraft was diverted to Makhachkala's Uytash Airport in Dagestan, Russia due to poor weather in Grozny. However the weather in Makhackala was also poor and the aircraft was unable to land, diverting to Aktau, Kazakhstan. The aircraft had been cruising at about 30,000 feet (9,144 m) when it disappeared from radar coverage at 08:40 local time (04:40 UTC) before reappearing off the coast of Kazakhstan at around 10:07 local time (06:07 UTC).

The crew gave a distress signal by squawking 7700 on its transponder, at 09:35 local time (UTC+05:00) and reported a failure of the control system. Then at 09:49, the pilots requested an emergency landing in Aqtau International Airport in Aktau, Kazakhstan and tried to make it in direct mode. The plane then reappeared on radar at 10:07, flying over the Caspian Sea toward Aktau, significantly off its usual flight path. At 10:28, the airplane struck the ground, with its right wing hitting first. It then tumbled, exploded, and broke into two major pieces. The explosion combined with the fire that broke out after the plane crashed destroyed the front section of the plane. The tail section of the plane came to rest upside down away from the main wreckage, and remained largely intact. The accident was captured on video, which showed that the landing gear was deployed when the plane hit the ground.

Preliminary information from Rosaviatsia suggested that the request for emergency landing was due to colliding with a flock of birds. Images from the scene showed significant perforating holes on the tail surfaces, and survivors of the accident reported hearing an explosion followed by shrapnel hitting the plane and some passengers. The crew had reported a strong impact on the fuselage from what was initially assumed to have been birds. Later Kazakhstan's emergency services reported that an oxygen cylinder on board might have exploded.

Following the accident, a state of emergency was declared in Tupkaragan District, where the aircraft crashed. A total of 482 emergency response personnel, 97 pieces of special equipment, 10 canine brigades, and two aircraft were deployed to the accident site. Additional doctors were flown in from Astana to treat the injured. The Blood Center of the Mangystau Region reached out to the public, asking that healthy individuals donate blood. Soon after, residents of Aktau arrived at the center to donate their blood. with around 300 participating. Residents of Astana have also lined up at the city's blood center to donate blood. The Russian Ministry of Emergency Situations flew equipment and medical workers to Kazakhstan to help with the response to the accident. The ministry later said that it would airlift Russian nationals injured in the incident to Moscow. A crisis centre was established at the Russian consulate in Oral, while diplomatic staff were also sent to the accident site. Representatives from the Azerbaijani consulate in Aktau were also deployed to the accident site. A special medical team and related equipment were also dispatched from Azerbaijan.

Azerbaijan Airlines suspended its Baku-Grozny-Baku and Baku-Makhachkala-Baku flights for the duration of the investigation. It also opened a hotline for relatives of those on board and changed its social media profiles to black as a sign of mourning.

On the day of the accident, the aircraft's flight recorders were located by a search team.

Chechen president Ramzan Kadyrov, Kazakh President Kassym-Jomart Tokayev, Armenian Prime Minister Nikol Pashinyan, Bulgarian President Rumen Radev, Serbian President Aleksandar Vučić, Pakistani Prime Minister Shahbaz Sharif, Kyrgyz President Sadyr Japarov, Russian President Vladimir Putin, Turkish President Recep Tayyip Erdoğan, the American, British, French, Lithuanian and Israeli embassies, and the Georgian, Romanian and Turkish foreign ministries expressed their condolences to Azerbaijan over the plane crash. Flowers were also laid at the Azerbaijani embassy in Astana in mourning for the victims.

Azerbaijani President Ilham Aliyev was on an aircraft heading to the Commonwealth of Independent States summit in Saint Petersburg, Russia when news of the accident broke out, leading him to return to Baku, where he held an emergency meeting on the accident shortly after landing at Baku airport. He declared a day of national mourning for 26 December. First lady and vice president Mehriban Aliyeva also expressed condolences.

Both Azerbaijan and Kazakhstan opened commissions to investigate the disaster. The Kazakh commission was headed by deputy prime minister Kanat Bozumbayev, while Kazakh emergencies minister Chingis Arinov also visited Aktau. The Azerbaijani commission was headed by Prime Minister Ali Asadov. Azerbaijan sent a delegation consisting of its emergency situations minister, deputy general prosecutor, and the vice president of Azerbaijan Airlines to Aktau to conduct an on-site investigation. Sources close to the investigation claimed that while nearing Grozny, surviving passengers stated that they had heard an explosion followed by what was described as shrapnel hitting and penetrating the aircraft.

On the morning of 25 December, at around 07:25 local time (04:25 UTC), ongoing UAV attacks were reported in Grozny allegedly by Ukrainian forces. Shortly afterward, at 09:35 local time (06:35 UTC), the crew of a passenger plane issued a distress signal by squawking 7700 on its transponder. According to Flightradar24, the aircraft encountered GPS jamming, with invalid ADS-B position data starting at 04:25 UTC due to significant interference.

Damage to the plane included shrapnel marks on the vertical stabilizer and wings, suggesting an explosion nearby. Witness accounts reported injuries, with one woman wounded in the leg and another witness's life jacket pierced by shrapnel. It was hypothesized by military analyst Yan Matveyev that Russian anti-aircraft systems, possibly the Pantsir-S1, may have mistaken the plane for a UAV due to a failure in the "friend-or-foe" identification system. Speaking to Türkiye Today, aviation analyst Richard Aboulafia challenged the bird strike hypothesis, saying "You can lose control of the plane, but you don’t fly wildly off course as a consequence." Türkiye Today also noted that "The concentration of puncture holes in the tail section suggests a possible loss of hydraulic systems, similar to the United Airlines Flight 232 accident." Militarnyi also noted similarities between this flight and an Ilyushin Il-22PP damaged by an anti-aircraft missile, stating that "one can see the similarity of damage and the number of holes in the hull, which probably indicates damage by a high-explosive fragment." Meduza similarly described evidence suggesting that the jet was hit by Russian air defence.