Khankendi (khänkănˈdē) [key], formerly Stepanakert styĭpänˌəkyĕrtˈ, city (1989 pop. 56,705), capital of Nagorno-Karabakh, a breakaway region of Azerbaijan. Silk, wine, and food are processed in the city. Khankendi became a town in the 1920s. Khankendi suffered severe damage from both the 1988 Armenian earthquake and the Armenian-Azeri war for control of Nagorno-Karabakh.