Pro-government forces expelled Al-Qaeda fighters from a provincial capital close to Yemen's second city of Aden on Friday, security officials said.
Soldiers and police drove the jihadists out of Huta, 30 kilometres (20 miles) north of Aden, and arrested 49 people suspected militants, they said.
A ceasefire has been in place in Yemen since last Sunday, although fighting is continuing in pockets across the country.
At least 35 pro-government fighters were killed during the first three days of the truce, according to military sources.
The ceasefire is meant to lay the groundwork for forthcoming peace talks in Kuwait.
Saudi Arabia and its Sunni-dominated Arab allies are backing the Yemeni government in the conflict while Shia Iran supports Shia Houthi rebels, who have seized the capital Sanaa and other regions.
Al-Qaeda and the Islamic State group have taken advantage of the chaos caused by the war to strengthen their grip on southern Yemen.
Forces loyal to President Abedrabbo Mansour Hadi have launched operations against jihadists in recent weeks, backed by the firepower of the Arab coalition.
A military official said the operation to liberate Huta was "designed to secure Aden", where Hadi's government has temporarily based itself.
A car bomb exploded on Friday in the port city near a building housing the foreign ministry, without causing casualties, security sources said.
The war has killed more than 6,300 people since March 2015 and worsened already dire conditions in the impoverished country, with more than 80 percent of the population now on the brink of famine.
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