Al-Qaeda's Syrian offshoot issued a loyalty pledge on Wednesday to the Islamic State of Iraq and the Levant at a tinderbox town on the Iraqi border, a monitor said.
The merger is significant as it opens the way for ISIL to take control of both sides of the border at Albu Kamal in Syria and Al-Qaim in Iraq, according to the Syrian Observatory for Human Rights.
ISIL -- which aspires to create an Islamic state that straddles Iraq and Syria -- has spearheaded an lightening jihadist offensive that has captured swathes of territory north and west of Baghdad this month.
After months of clashes between the two sides, Al-Qaeda's official Syrian arm the Al-Nusra Front "pledged loyalty to ISIL" in Albu Kamal, said Observatory director Rami Abdel Rahman.
"The pledge comes amid advances by ISIL in Deir Ezzor province" in eastern Syria on the Iraqi border, Abdel Rahman told AFP.
An ISIL jihadist confirmed the reports on Twitter, and posted a photograph showing an Egyptian Al-Nusra Front commander shaking hands with a ISIL leader of Chechen origin.
Although both ISIL and the Al-Nusra are rooted in Al-Qaeda, the two have been rivals for much of the time that ISIL has been involved in Syria's civil war since spring last year.
"They are rivals, but both groups are jihadist and extremists. This move will create tension now with other rebel groups, including Islamists, in the area," said Abdel Rahman.
An opposition activist in Albu Kamal told AFP via the Internet that "there is a lot of tension, and the situation is only going to get worse."
Using a pseudonym for security reasons, Hadi Salameh also said the merger would "cause a big problem with the local tribes, who will not welcome this change".
Another activist said the merger comes days after local rebel brigades who had been working with Al-Nusra Front signed a declaration excluding the official Al-Qaeda branch from the Islamic court, which acts as the de facto authority in many rebel areas of Syria.
"The loyalty oath (to ISIL) comes after tension between Al-Nusra and the local rebels," said the activist, Abdel Salam al-Hussein.
He also said hundreds of thousands of people, including displaced families from neighbouring Iraq as well as flashpoint areas in Syria, are living in Albu Kamal, and that it would be a "catastrophe" if fighting broke out in the town.
Hussein said: "ISIL fighters are now positioned at the entry of Albu Kamal, on the Iraqi side."
He added: "The situation is very sad. We have lost everything."
Meanwhile, the Syrian air force carried out air raids targeting ISIL-controlled Raqa in the north of the country and Muhassen in the east.
President Bashar al-Assad's regime has rarely targeted ISIL bastions, except in recent days after the group and other Sunni militants launched an offensive in Iraq, wresting control of Mosul and other pars of Iraq.
ISIL aspires to create an Islamic state that straddles Iraq and Syria.
A Syrian government newspaper reiterated frequent regime claims that the United States and Israel are behind the rising violence, and that they are vying to "divide Syria along sectarian and religious lines".