The Syrian Democratic Forces (SDF), with support from air strikes conducted by the US-led coalition, deployed across the Euphrates Valley village.
"The SDF managed to break the defences of the Islamic State group after massing a large number of fighters backed by the international coalition," the Syrian Observatory for Human Rights said.
"They achieved quick progress inside Hajin, the largest of the villages that were controlled by IS," Rami Abdel Rahman, the head of the Britain-based monitoring organisation, said.
The SDF said on social media they had "liberated the city centre of Hajin and the big mosque".
Hajin lies on the east bank of the Euphrates in the eastern province of Deir Ezzor, about 30 kilometres (18 miles) from the border with Iraq.
The area held by IS is sometimes referred to as the "Hajin pocket", the last rump of a once-sprawling "caliphate" the group proclaimed in 2014 over parts of Syria and Iraq.
The SDF Kurdish-Arab alliance launched an operation in September to flush out IS but their advance has been fraught with obstacles.
The push to retake Hajin was delayed by Turkish threats on Kurdish heartlands further north and deadly counter-attacks by die-hard jihadists making a bloody last stand.
"Now IS is confined to tunnels and to the edges of town," Abdel Rahman said.
"Fighting on the group and air strikes are continuing. The mines planted by the jihadists are the main remaining obstacle," he said.
No casualty toll was immediately available for the latest fighting but according to the Observatory close to 500 SDF fighters have been killed since the start of the operation on September 10.
Around 300 civilians have also been killed, many of them in coalition air strikes, and thousands have been forced to flee their homes.
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