Backed by air strikes by the US-led coalition bombing IS in Syria and Iraq, fighters with the Syrian Democratic Forces (SDF) alliance entered Manbij from the south, a monitoring group said.
The advance marked a major breakthrough in the battle for Manbij, once a key link on the supply route between the Turkish border and IS's de facto Syrian capital of Raqa.
The loss of the city would deal another blow to IS following a string of recent battlefield defeats, including the taking by Iraqi forces earlier this month of the centre of the Iraqi city of Fallujah.
The Syrian Observatory for Human Rights, a Britain-based monitor, said SDF forces were able to break through IS defences in Manbij a few hours after taking control of a village on the city's southwestern outskirts.
"Fierce street fighting between buildings" erupted as they entered the city, said Observatory chief Rami Abdel Rahman, whose group relies on a broad network of sources inside Syria to monitor the conflict.
"Our forces, in coordination with the coalition, are determined to advance inside the city and eliminate all Daesh fighters," he said, using an Arabic acronym for IS.
Abdel Rahman said tens of thousands of civilians were trapped inside the city, though some 8,000 had been able to flee since the start of the SDF offensive on Manbij on May 31.
He said six civilians including a child were killed today by a mine as they tried to flee the city, which had a population of about 120,000 before the start of Syria's civil war in 2011.
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