Residents of Fallujah said about 30 men in Iraqi military uniforms, who were captured earlier this week, were driven in the back of seized military vehicles through the city, located about 65 kilometers west of Baghdad.
The captured soldiers looked very exhausted, eyewitnesses said.
The militants driving the convoy blasted songs glorifying the leader of the Islamic State group, Abu Bakr al-Baghdadi, as they paraded their captives.
The residents spoke on condition of anonymity, fearing for their safety.
On Sunday, Islamic State fighters disguised in Iraqi army uniforms and driving stolen Humvees attacked an Iraqi army camp in the western Anbar province, killing 40 troops and capturing 68.
The attacks dealt a blow to government efforts to rein in the militants who have seized much of the country's north and west.
In Baghdad late today, a car bomb detonated on a busy commercial street in the eastern neighborhood of Sadr City, killing at least 17 people and wounding 35, police and hospital officials said.
They spoke anonymously as they are not authorized to address the media.
Meanwhile, the country's new Prime Minister, Haider al-Abadi, forced two top generals to retire as part of a plan to restructure the military, which suffered significant losses when the Islamic State group advanced on the city of Mosul in June.