This paper aims to elucidate the dynamic capabilities (DCs) deployment by small- and medium-sized enterprises (SMEs) in response to sanctions. Based on the interviews with Russia-based Chinese practitioners, we reveal how Chinese SMEs implement DCs to strategize their survival and growth in the sanctioned Russian market. This study portrays four scenarios and mechanisms of DCs emerging and reconfiguring firms’ prior resources and capabilities to deal with sanction contingencies. Additionally, we suggest that Chinese culture predominately shapes Chinese SMEs’ aspirations and actions in Russia. This research contributes to the strategic management and entrepreneurship literature by illuminating international business under sanctions and augmenting the theorization of DCs through explicating their nature and deployment processes and the peculiarities of SMEs in developing DCs. It simultaneously provides implications for businesses pursuing survival and expansion under adverse market conditions.