Sweden had captured Ivangorod during the Russo-Swedish War of 1495–1497, and offered it to Livonia, an offer which had been refused.

Moscow had perceived this as a Swedish–Livonian alliance.

As negotiations fail, Livonia begins preparing for war.

In May 1500, a war had broken out between Moscow and the Grand Duchy of Lithuania.

On May 17, 1501, Livonia and Lithuania conclude a ten-year alliance in Vilnius.

The Mucovite-Lithuanian War continues, just not as successfully for Muscovy.

As Lithuanian forces arrive to the region, the Muscovite forces have to move slowly.

Additionally, the Livonian Order, led by Wolter von Plettenberg, has joined the war as an ally of Lithuania.

In August 1501, von Plettenberg leads a Livonian army, reinforced with three thousand mercenaries from Lübeck, towards Pskov.

The armies meet on August 27 on the Siritsa River, ten kilometers south of Izborsk, on the western approaches to Pskov.

The Pskovian regiment attacks the Livonians first but is thrown back.

The Livonian artillery then destroys the remainder of the Muscovite army despite a Russian attempt to reply with their own, insufficient, artillery force.

In the battle, the smaller Livonian army defeats the Muscovite army (drawn from the cities of Moscow, Novgorod and Tver as well as from Pskov—which will not formally be part of Muscovy until 1510) in large part due to the Order’s formidable artillery park and the Russians' significant shortage of guns of any kind.

The defeat prompts Moscow to modernize its army, by creating standing infantry units armed with arquebuses.

Livonian troops now capture and burn Ostrov and …

…unsuccessfully besiege Pskov.

The Russians retaliate against Livonia by invading and plundering eastern Livonia and defeating the Order at Helme, near Dorpat.

The Russians have harshly ravaged Eastern Livonia during the winter of 1501–1502, and many Livonian dignitaries want to make peace with Muscovy, but Plettenberg decides to continue war and tries to conquer Pskov one more time.

Due to Moscow's strong support for Pskov, however, he is forced to retreat southwest from the city.

On September 13, 1502, he wins the Battle of Smolin (at Lake Smolin close to the village of Palkino in Pskov Oblast) with his five thousand men against about twelve thousand Russian troops.

Alexander, happy to purchase peace, asks Vladislaus II of Bohemia and Hungary to act as the mediator and a six-year truce is concluded on the Feast of the Annunciation, March 25, 1503.

The Grand Duchy of Lithuania loses approximately two hundred and ten thousand square kilometers (eighty-one thousand square miles) or a third of its territory: Chernihiv, …

…Novhorod-Siverskyi, …

…Starodub, and lands around the upper Oka River.

Russian historian Matvei Kuzmich Liubavskii counts Lithuanian losses at seventy volosts, twenty-two towns, and thirteen villages.

The Lithuanians also acknowledge Ivan's title sovereign of all Russia.