Government troops and allied Sunni paramilitary tribal fighters, covered by US-led coalition and Iraqi aircraft, entered the central part of Shirqat, some 280 km from capital Baghdad, seized the local government compound, the main hospital building and police headquarters, Xinhua news agency quoted a source as saying on a condition of anonymity.
Sporadic clashes continued in Shirqat as the troops pushed further into the remaining neighbourhoods in the central part of the town, the source said.
The operation to liberate the town was launched on Tuesday with heavy artillery and mortar barrage on IS positions.
The liberation of the town, which is the last one under IS control in Salahudin province, is part of a major offensive to free the major IS stronghold in Mosul, the capital of Iraq's northern province of Nineveh.
Mosul is the second largest city in Iraq and has been under IS control for more than two years since the extremist group seized parts of Iraq's northern and western regions in June 2014.
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