When Premier Joseph Stalin came to power in the Soviet Union in 1929, he was impatient with the delays that had kept the Northeast Passage from developing into the valuable cargo and passenger route it had promised to be. So he set up an organization called the Central Administration of the Northern Sea Route, whose job was to get ships running regularly along the Arctic Ocean from western Russia to the Bering Strait. He appointed the distinguished geophysicist and Arctic veteran Otto Yulevich Schmidt as the head of the project, and Schmidt went into action immediately. By 1932, he had readied the icebreaker Sibiriakov, with Vladimir Voronin as captain, for a voyage through the passage. Although the ship broke down a number of times, the voyage was successful: In 65 days, the Sibiriakov had traveled from Arkhangelsk to the Pacific Ocean, the first vessel ever to accomplish a passage of the northern sea route without wintering along the way.
Flushed with the success of this first attempt, Schmidt prepared a second vessel, the Chelyuskin, by adapting it with a powerful 2,500- horsepower engine, special frame, and reinforcements, and extra steel plates on the bow and forward bulkhead. Its construction would allow it to function as a semi-icebreaker. Confident that the ship would be able to plow through the ice of the Arctic Ocean, Schmidt loaded it up and departed in August 1933 with 100 passengers and heavy cargo bound for Wrangel Island.
By the time the ship reached Cape Chelyuskin (after which it was named), Captain Voronin realized that his vessel was not performing up to expectations and that conditions were worsening rapidly as the summer was drawing to a close. Schmidt considered turning back but decided to plow on through the ever-thickening ice. By mid-September, the Chelyuskin was picking its way through narrow leads of water, twisting and turning to avoid the big floes, heading ever eastward. Then, in the East Siberian Sea, 200 miles from the Bering Strait, the ship could move no more. Back and forth the ship drifted, frozen solidly in the pack ice, its powerful engine unable to free it. Suddenly, the ice began to drift steadily to the southeast, and on November 3, the ice pack, with the Chelyuskin in it, moved into the Bering Strait. By radio, the captain heard that 12 miles ahead was open water. In a matter of minutes, the Chelyuskin would be in the Pacific Ocean free to steam south. Then, without warning, the drift reversed itself and with incredible speed, swept ice and ship to the north, in the grip of a powerful current. After weeks of drifting to the north and northwest, Schmidt realized the ship was in “ancient” ice, meaning the main polar pack. The ship would never be free. With five crew members, he began in secret to prepare to abandon ship.
The end came on February 13, 1934, when a mountain of ice gashed a 40- foot-long hole in the side of the ship, flooding the engine and boiler rooms with Arctic water. The ship’s helmsman, Mikhail Gavrilovich Markov, described what followed in The Voyage of the Chelyuskin: “Then the Chelyuskin’s bow began to go down rapidly and the last command rang out—‘All on the ice! Leave the ship!’ The gangway twisted and fell.” The last men aboard jumped onto the ice and within minutes the ship sank beneath the sea.  The crew and passengers now settled down to make what they named “camp Schmidt” on the ice floes. These pioneers did not have radios to send messages nor airplanes to come immediately to the rescue, nevertheless, by April 13, 92 men, 10 women, and two infants were airlifted to safety—not a single life lost. 
The aircraft pilots who took part in search and rescue operations were among the first people to receive the newly established highest title of Hero of the Soviet Union. Those pilots were Anatoly Liapidevsky, Sigizmund Levanevsky, Vasili Molokov, Mavrikiy Slepnev, Mikhail Vodopianov, Nikolai Kamanin and Ivan Doronin. They were flying ANT-4, civilian version of a TB-1 heavy bomber. Two American air mechanics, Clyde Armistead and William Latimer Lavery, who also helped to search and rescue the steamship, on September 10, 1934 were awarded the Order of Lenin.
The sinking of the Chelyuskin did not dampen determination to open the Northeast Passage; rather it served to bring about more powerful icebreakers and a greater resolve to make the passage a viable and profitable sea route.
 Following several unsuccessful attempts, the wreck was located on the bed of the Chukchi Sea by a Russian expedition, Chelyuskin-70, in mid-September 2006. Two small components of the ship's superstructure were recovered by divers and were sent to the ship's builders, Burmeister and Wein of Copenhagen, for identification.
 104 people, including 10 women and 2 little girls who were born during the trip, landed on the iceberg and set “Schmidt’s camp” there. All necessary items were taken to the iceberg from the boat, and this allowed the people to survive one month on the iceberg until help arrived. On March 5, 1934, after 28 failed attempts, pilot Anatoly Lyapidevsky found the people from Chelyuskin and rescued the women and children from the iceberg. The rest of the 92 passengers and crew members were evacuated on April 13, 1934.
The polar pilots made 24 flights to rescue the expedition, and were awarded the Heroes of the Soviet Union titles. Rescuing the Chelyuskin expedition became a remarkable point of Russian history.