
After World War I, Vyžuonos became part of independent Lithuania. Its Jewish community shrank, both in absolute terms and (even more so) relative to the non-Jewish population. The worldwide Great Depression of 1930-32 dealt a blow to the well-being of the Jews of Vyžuonos. In 1940, on the eve of the Soviet annexation of Lithuania, there were some fifty Jewish families living in the town.
German troops occupied Vyžuonos on June 26, 1941. A short while later, the occupiers resettled the town's Jews into two small lanes, thereby creating a makeshift ghetto. In late June, the anti-Soviet Lithuanian partisans (also known as baltaraiščiai, the "white armbanders") committed several small-scale massacres of Jews. On August 29, 1941, the remaining Jews of Vyžuonos were shot in the Rašė Forest, north of Utena.
Vyžuonos was liberated by the Red Army in July 1944.