Aghdam is one of three due to be handed back. The brutal war lasted six weeks, leaving thousands dead and displacing many more.
Armenian forces occupied some 77 percent of Aghdam in 1993, forcibly displacing almost 200,000 Azerbaijanis from their homeland.
Baku retook several cities and almost 300 settlements and villages from the Armenian occupation during the 2020 clashes.
As part of last week's peace deal, Armenia agreed to return some 15 to 20 percent of the Nagorno-Karabakh territory captured by Azerbaijan in recent fighting, including the historical town of Shusha. Besides, Armenia and Azerbaijan should carry out the exchange of prisoners of war and the bodies of those killed.
In addition to Friday's deadline to cede Aghdam, Armenia will hand over the Kalbajar district wedged between Nagorno-Karabakh and Armenia on November 25 and the Lachin district by December 1.
The Russian peacekeeping force of some 2,000 troops has deployed to the administrative centre of the region, Stepanakert, and set up checkpoints and observation posts along the strategic Lachin corridor connecting Nagorno-Karabakh with Armenia.
Nagorno-Karabakh lies within Azerbaijan but has been under the control of ethnic Armenian forces backed by Armenia since a war there led to a ceasefire in 1994. The town, which was home to over 30,000 people at the time of the break-up of the Soviet Union in 1991, found itself in between warring Azerbaijan and its breakaway region.
Five days after the start of Azerbaijan's counter-offensive operation, already 1,500 servicemen in the ranks of the Armenian Armed Forces were deserted, former head of the General Staff of the Armenian Armed Forces, former head of the control service of the Defense Ministry, Colonel-General Movses Hakobyan said.
After the peace accord was signed last week, Russian President Vladimir Putin said total fatalities that include dozens of civilians had surpassed 4,000 people. The Russian leader said the Azerbaijani and Armenian sides would remain on the positions they hold and Russian peacekeepers would be deployed to the region. It was celebrated as a victory in Azerbaijan, but sparked mass protests in Armenia, with thousands regularly taking to the streets to demand the ouster of the country's prime minister.