As of July 7, when German Army Group A began its part of Operation Blue, the 349th was in the second echelon of 12th Army, manning defenses south of the northern Donets protecting the approaches to Voroshilovgrad and Lisichansk. The division retreated into the Caucasus region under this command; in a report from July 25 its status was described as "remnants", and its strength was likely well under 2,000 men at this time. As of August 1 it was reassigned to 56th Army in the Coastal Operational Group of North Caucasus Front. From the 12th to the 15th the division participated in the defense of Krasnodar against the V Army Corps of German 17th Army, but the city fell on the latter date.