According to Encyclopaedia Britannica, Russia dropped out of World War I as a direct result of the Bolshevik Revolution of November 1917, in which the provisional government was overthrown and Lenin became leader. Years of defeat on the battlefield had weakened the Czarist regime and strengthened the Bolshevik cause, and Lenin wanted to divert resources from the war to consolidate the Bolshevik victory at home.
The Russian Army had entered the war with poor leadership and insufficient training, supplies and weapons. It suffered a series of disastrous defeats. By the end of 1916, the number of soldiers killed, taken as prisoners of war or missing approached 5 million. In March 1917, the Bolsheviks called for committees of soldiers to take over the weapons of their units, regardless of the orders of their officers. In mid-1917, non-Russian peoples in the former empire began clamoring for independence. In late 1917, Lenin's decree abolishing private property and dividing landed estates among the peasants caused many soldiers to desert the front and rush homeward to claim the land. Russia could no longer viably wage the war.
On Dec. 15, 1917, Russia and the Central Powers declared a cease-fire. Negotiations ensued. Because Russia was in such a weakened state, Germany dominated the talks. Finally, through the Treaty of Brest-Litovsk, Russia lost a million square miles of its territory, a third of its population, and a significant amount of its industry and oil, iron and coal stores. In November 1918, however, when the Central Powers lost the war, this treaty was annulled, though Russia did not get back its lost territories.