Troops used artillery, tank and machine gun to fire on IS positions on the edge of the Gogjali neighbourhood, with the extremists responding with guided anti-tank missiles and small arms to block the advance. The US-led coalition supporting the operation used airstrikes to hit the district.
If Iraqi forces enter Gogjali neighborhood it will mark the first time for troops to have set foot in Mosul in over two years, after they were driven out by a much smaller group of IS extremists in 2014. Mosul is the final IS bastion in Iraq, the city from which it declared a "caliphate" stretching into Syria.
Its loss would be a major defeat for the jihadis.
From the nearby village of Bazwaya, smoke could be seen rising from buildings on the city's edge, where shells and bombs were landing. The IS fighters quickly lit special fires to produce dark smoke in order to obscure the aerial view of the city.
Inside the village, white flags are raised on some buildings by the residents to show that they wouldn't resist Iraqi forces' advance.
The families, estimated to number in the hundreds, will be evacuated from the village to a displaced persons camp, according to Brig Gen Haider Fadhil of the Iraqi Special Forces.
For over two weeks, Iraqi forces and their Kurdish allies, Sunni tribesmen and Shiite militias have been converging on Mosul from all directions to drive IS from the city.
Entering Gogjali could be the start of a gruelling and slow operation for the troops, as they will be forced to engage in difficult, house-to-house fighting in Mosul's more urban areas. The operation is expected to take weeks, if not months.
Iraqi forces have made uneven progress in closing in on the city. Advances have been slower to the south, with government troops still 35 kilometres away. To the north are Kurdish forces and Iraqi army units, and Shiite militias are sweeping toward the western approach in an attempt to cut off a final IS escape route.
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