How do you lose a Wanted Level in Red Dead Redemption 2? Once you're wanted and in the identification stage, simply run or ride away from the red area that the authorities believe you to be in.
Basically, in areas marked with Wanted Dead or Alive NPCs will be actively hostile to your presence since you're so well known as a wrong'un. Lawmen in the area will be searching for you and will shoot on sight.
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