"Today one of the units of the defense ministry fled from one of our flanks... exposing the front," Wagner boss Prigozhin said in a video.
Prigozhin said soldiers were fleeing because of the "stupidity" of Russian army commanders, who he said were giving "criminal orders."
"Soldiers should not die because of the absolute stupidity of their leadership," Prigozhin said.
In an unprecedented attack on the Russian army, Prigozhin said Moscow's top generals were trying to "deceive" President Vladimir Putin over the Kremlin's Ukraine campaign.
"If all the tasks are being carried out in such a way as to deceive the commander-in-chief (Putin), then either he will rip your arse or the Russian people will - who will be angry that the war is lost," Prigozhin said.
He released the video on Russia's Victory Day, when Moscow celebrates the Soviet victory over the Nazis in World War II.
Prigozhin, whose influence has risen hugely in Moscow's Ukraine offensive, has in recent days released a series of scathing videos attacking Russia's military leadership.
He has threatened to pull his fighters out of Bakhmut on May 10 if he did not receive badly needed ammunition.
The mercenary group has spearheaded Moscow's fight for the east Ukrainian city.
As Ukraine prepares for a spring offensive, the outspoken 61-year-old questioned the Kremlin's ability to defend the country.
"Why is the state not able to defend its country?" Prigozhin said in the video, adding that Ukraine was hitting Russian border regions "successfully."
He said Ukraine was preparing for a offensive "that will be on the ground, not on TV".
"So far, in our country everyone thinks that everything needs to be done on TV."
Russia has provided near round-the-clock coverage of its offensive, showing the army in an exclusively positive light.
