Yevgeny Prigozhin has accepted Belarusian President Alexander Lukashenko's proposal to stop Wagner Group's advance toward Moscow.
In a surprise development, the leader of the Wagner Group confirmed he will take further steps to de-escalate tensions.
He issued an audio message, confirming his fighters are returning to their bases to "avoid bloodshed".
He said he "gave the order to turn back because of the risk of blood being spilled".
"We’re turning around our convoys and going in the opposite direction," Prigozhin continued.
The U-turn comes after Vladimir Putin appeared ready for war, after his forces blitzed an oil depot in Russia's Voronezh region - as the Wagner mercenary group stormed barricades, edging closer to Moscow.
"We left on June 23 for the march of justice," Prigozhin adds in his audio message.
"In a day we travelled, not reaching 200 km, to Moscow.
"During this time, we have not shed a single drop of the blood of our fighters.
"Now the moment has come when blood could be shed, therefore, realising all the responsibility for the fact that Russian blood will be shed on one of the sides, we turn our columns around and return in the opposite direction to the field camps, according to the plan."
The Russian leader's troops had seized control of roads and placed sandbags along the roadsides in a bid to prevent coup forces from making any further advances.
The rebelling group claimed to have seized control of Rostov-on-Don in southern Russia, and reports suggested it also controlled key sites in Voronezh, a city further north.
All mass outdoor events have been suspended in Moscow for at least one week, authorities said.
Rishi Sunak had earlier this evening spoken to US president Joe Biden, French president Emmanuel Macron and German chancellor Olaf Scholz "to discuss the situation in Russia and reiterate their continuing support for Ukrainian sovereignty".
It followed a meeting of the Government's emergency Cobra committee chaired by Foreign Secretary James Cleverly, who also joined a call with fellow G7 foreign ministers to discuss the fast-moving situation.