The Syrian army and its allies took complete control over Albu Kamal, IS group's last significant town in Syria, a military news service run by Hezbollah said on Sunday.
The army had declared victory over IS group in Albu Kamal earlier this month but the militants then staged a counter-attack using sleeper cells hidden in the town.
Driving IS militants from Albu Kamal means only a few villages along the Euphrates and patches of nearby desert, as well as isolated pockets in other parts of the country, remain in Syria of the caliphate it declared in 2014.
Most of the forces battling IS militants in Syria and Iraq have said they expect it to go underground and turn to a guerrilla insurgency using sleeper cells and bombings.
Western intelligence agencies have said it will still be able to inspire attacks on civilians around the world.
"The Syrian Army and its allies in the axis of resistance have expelled Daesh from its last stronghold on Syrian soil," the Hezbollah news service reported.
The "axis of resistance" is used by those in it to describe the alliance of Iran, Syria and Shia militias including Hezbollah.
The British-based Syrian Observatory for Human Rights said on Sunday that most IS members withdrew from the town, with fighting continuing in the perimeter of Albu Kamal.
IS group area of rule in Syria has crumbled this year under two rival military campaigns.
The Syrian Democratic Forces (SDF) alliance of Kurdish and Arab militias, backed by a U.S.-led coalition has driven it from much of its territory in the north, including its former Syrian capital Raqqa.
Syria's army and its allies have waged an offensive across central and eastern Syria backed by Russian air and missile power.
The two offensives have mostly avoided conflict with each other through communication between the United States and Russia. However, Syrian and Iranian officials have said that Damascus seeks to regain control over areas held by the SDF.