The government advance in Ramussa further seals off Aleppo's opposition-held eastern districts, under renewed siege since Sunday by forces loyal to President Bashar al-Assad.
Government forces and allied fighters "retook full control of the Ramussa district after ferocious clashes with rebels, Islamist fighters, and jihadist groups," said the Syrian Observatory for Human Rights.
Observatory head Rami Abdel Rahman said the capture came after reinforcements of Iraqi and Iranian pro-government militiamen arrived south of the city earlier this week.
Rebels and their jihadist allies had launched a major assault in Aleppo's southern outskirts on July 31 in a bid to break the government's encirclement of the eastern neighbourhoods.
They successfully opened a route into those districts a week later via Ramussa, but regime forces have managed to recapture nearly all that territory.
Abdel Rahman told AFP on Thursday that rebels still hold marginal positions in a residential complex and a school.
An AFP correspondent in the city's east said shops had been struggling since Sunday to secure goods to sell and that prices were skyrocketing.
Once Syria's commercial powerhouse, Aleppo is now a divided city, with rebel groups firing into the government-held west and regime and allied Russian warcraft pounding the opposition-controlled east.
On Wednesday, strikes by unidentified aircraft on the eastern Sukkari district left 11 civilians dead, according to the Observatory.
Aleppo province, which borders Turkey to the north, is a patchwork of territory held by competing forces in Syria's war: rebels, the regime, Kurdish fighters, and jihadists.
The Islamic State group's last major position in the province is Al-Bab, eyed by rival Kurdish and Arab fighters backed by the US-led coalition and Ankara respectively.
Four IS fighters were also killed in the raids and another four bodies have yet to be identified, according to the monitor.
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