The article is devoted to the analysis of the defense-industrial complex (DIC) of Russia in the conditions of economic sanctions. And although the center was the oil and gas industry, as well as the banking sector, economic sanctions against Russia affected the DCI. They touched first of all on such large Russian defense concerns as air defense "Almaz-Antey", "Sirius", "Stankoinstroment", "Kalashnikov", "Tula Arms Factory", NGO "Oriental Complexes", as well as "Dobrolyte". The prohibition of debt financing has affected such major enterprises of the defense industry as "Uralvagonzavod", "Oboronprom", "United Aircraft Corporation". The article shows, in general, the favorable impact of sanctions on the industry. At the end of 2016, Russia took the second place in world arms exports with a share of 23%, the US became the leader – their share was 33%. But the structure of the share capital in the defense industry companies is completely different if we compare these two countries: in the US, private companies dominate the market, in Russia – the largest enterprises are owned by the state. In the course of the analysis, it turned out that Russian defense industry enterprises are unprofitable or unprofitable, they do not have stability in financial performance, since they are highly dependent on government spending. To improve the current situation in this sector, it is advisable for the state to modernize the military-industrial complex companies in order to enhance the role of market mechanisms that will stimulate R & D, as under modern conditions of competition in any market, innovations represent an exclusive advantage for enterprise prosperity.