The capture of Akashat, a former mining town in mainly Sunni Arab Anbar province, came just hours after the assault started
Iraqi forces on Saturday captured a desert outpost of the Islamic State group near the Syrian border in preparation for a drive up the Euphrates valley towards the frontier, commanders said.
The capture of Akashat, a former mining town in mainly Sunni Arab Anbar province, some 100km south of the militants' border bastion of Al-Qaim, came just hours after the forces assaulted it.
Al-Qaim and the Euphrates towns of Rawa and Anna downstream form just one of two enclaves still held by IS in Iraq after a string of battlefield defeats this year.
"The army, the Hashed al-Shaabi [Popular Mobilisation Forces], tribal units and the police captured Akashat," the Joint Operations Command leading the fight against IS said in a statement.
Earlier, JOC head General Abdelamir Yarallah said the operation "to liberate Akashat" was aimed at securing the border to its north.
The Hashd al-Shaabi are a paramilitary force largely composed of Iran-trained Shia militias but also including some fighters recruited from Sunni tribes.
Iraqi commanders estimate there are no more than 300 civilian families left in Akashat, a former railhead that was once a major source of phosphate production.
Imad Meshaal, mayor of Rutba, a desert town further south recaptured from IS last year, told AFP the militants had turned the area into a major hub for arms caches, training camps and command centres.
Iraqi commanders said they estimate IS still has more than 1,500 fighters in its Al-Qaim enclave.
The militants also control a second enclave west of the ethnically divided Kurdish-held city of Kirkuk centred on the mainly Sunni Arab town of Hawija.
A promised offensive against IS there has been delayed by a row over a controversial referendum on Kurdish independence planned for later this month.