Iraqi government forces supported by Kurdish peshmerga and Shiite militias have gained control of Suleiman Beg near the recently liberated town of Amirli.
Security sources said troops entered the village in Salahuddin province north of Baghdad on Monday. It has been under the control of the Islamic State since June.
Around 39 IS militants surrendered but at some continued to target troops with sniper fire.
In a separate incident, eight IS fighters were killed in U.S. air attacks in Anbar province west of Baghdad.
City Council President Sabah Kehut told The Anadolu Agency that 10 others were injured in the attack.
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