On 5 July, the German military regime ordered the Jews of Liepāja to sew yellow stars onto their clothing, forbade them from leaving their homes for most of the hours of the day and using public transportation, and forced them to turn over a large amount of property. Jewish business owners had to mark their stores with a sign declaring them Jewish-owned. The Jews were also forced to hand over their personal radio sets, typewriters and private modes of transportation.
Each day, thousands of Jewish men, out of the 7,100 Jews in the city, were ordered to gather in the square, where they were abused by armed policemen. Some of the Jews were sent to forced labor for the German Army, clearing the battle ruins and burying the victims. By the end of July, almost 2,000 Jewish men had been detained and murdered. Volunteers from the "Arājs Kommando," a unit of the Latvian auxiliary police established in Riga under the leadership of the Latvian SS officer Viktors Arājs, participated in the slaughter. Most of the murders took place on the Baltic shore, including in the fishing village of Šķēde, north of Liepāja.
At first, the Jews of Liepāja had no idea what had happened to their abducted family members. They heard that those missing had been sent to labor outside of the city. Latvian women brought the families notes requesting money, clothing and food. A few weeks later, it was discovered that the notes had been forged; at the time they were created, the Jews who had allegedly written them were already dead.
In August 1941, there was a lull in the mass murder, although it continued on a smaller scale. Working Jews received labor permits, allowing them to be released from the daily roll call, and sometimes protecting them from abduction and execution, which continued on an ad-hoc basis. Handcraft laborers and professional technicians working for the German Army, police and navy received better protection. The Jewish institutions still active in the city were the home for the elderly and the "Linat Tzedek" hospital, although they operated with little equipment and no means of anesthesia.
In September and October, the killings began anew, and hundreds of Jews, mainly children, pregnant women and geriatrics, including residents of the Jewish home for the elderly, were murdered. By November, some 3,900 Jews remained in Liepāja, mostly women and children. On 13 December, the SS and police commander Fritz Dietrich publicized an official order by which the Jews of the city were ordered to stay in their homes on 15-16 December. At the same time, the German security police issued some 350 new labor permits, which were distributed to Jews working in the police stations, the medical staff at the Jewish hospital and handcraft laborers, as well as their families. Many tried to add Jewish contemporaries and friends to their permits. Other prepared hiding places in basements, attics and with non-Jewish acquaintances. Some managed to acquire certificates of protection from members of the German military.
From 14-17 December, Latvian policemen gathered most of the Jews in the city from their homes, according to pre-prepared lists of addresses. The Jews were forced to stand in their courtyards for many hours at a time, with their faces to the wall, without food or water. At the end of the selection process, those with protective papers were allowed to return to their homes, while the other Jews were taken by trucks and snow ploughs to Šķēde. They were ordered to undress, and shot in groups, by German and Latvian shooting squads, into pits that had been dug for this purpose. The massacre began on 15 December, while the Jews of the city were still being gathered in different groups, and ended on 17 December.
After the murder of 2,749 Jews, almost 2,000 Jews with labor permits, their families and those who had managed to escape the slaughter remained in Liepāja. By the spring of 1942, another 100 Jews had been murdered. A small number managed to hide. A group of 22 Jews attacked Latvian guards and escaped. The German commander, SS officer Wolfgang Kügler, was bribed for a short while by the Jews to cease the manhunts.