"We control all parts of the town and managed, in very limited time, to root out Daesh (IS)," Lieutenant General Riyadh Jalal Tawfik, who commands Iraq's ground forces, told an AFP reporter in Qayyarah.
The commander said engineering units were now clearing the town, which lies about 60 kilometres (35 miles) south of Mosul, of unexploded ordnance and booby traps.
Prime Minister Haider al-Abadi issued a statement hailing what he said was a key step towards reclaiming Mosul, IS's de facto Iraq capital and the country's second city.
"I present my congratulations to the Iraqi people for the liberation of the strategic town of Qayyarah and neighbouring areas," he said.
The operation to retake Qayyarah was launched on Tuesday and led by Iraq's elite counter-terrorism service.
Iraqi forces had already recaptured a nearby air field and Qayyarah is expected to be become one of the main launchpads for an assault on Mosul in the coming weeks or months.
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