Analysis of the distribution of ostracods from the Armkhi Formation (Callovian) of the Tsudakhar section (Central Dagestan) enabled the identification of a stratigraphic sequence of six assemblages determined by paleoecological conditions and the first ostracod-based biostratigraphic zonation of the Callovian of Dagestan. Beds with Pleurocythere khapissovi and the Neurocythere cruciata intermedia Zone of the European ostracod scales were identified in the middle Callovian; this facilitated the interregional correlation for ostracods. Paleoecological analysis demonstrated the formation of the lower part of the section (beds with P. khapissovi and the N. cruciata intermedia Zone) in the coastal zone of the upper subtidal with normal marine salinity, good aeration, and low sedimentation rates. Sediments of the upper part of the section (paleoecological intervals with Schuleridea translucida–Cytherella perennis and with C. perennis) accumulated in the lower zone of the upper subtidal with a high sedimentation rate, high (and constantly increasing) eutrophication, and lowered pH values. Analysis of the paleogeographic distribution of the species studied revealed the connections of the Caucasus Sea to Western and Eastern Europe and to Central Asia.