Supported by coalition air raids, Iraqi forces have pushed into IS's Mosul stronghold and a Kurdish-Arab militia alliance has been advancing on the jihadists' de facto Syrian capital Raqa.
The Syrian Observatory for Human Rights said a coalition strike overnight had hit the IS-held village of Al-Heisha, about 40 kilometres north of Raqa.
Rami Abdul Rahman, the head of the Britain-based monitoring group, said nine women and two children were among the 20 dead civilians and that 32 others had been wounded.
"There is no such thing, and any such claims are IS news," SDF spokeswoman Jihan Sheikh Ahmed told AFP. The US-led coalition said it was checking on the report.
The SDF's online media account said at least six IS fighters had been killed by coalition strikes in the village and accused the extremist group of preventing civilians from leaving Al-Heisha in a bid to use them as "human shields".
Civilians fleeing Al-Heisha told AFP on Tuesday that IS fighters had brought heavy weaponry into the village when the SDF operation began.
"They wouldn't let us leave. We had to escape by running out into the fields, with our children and old people. What else could we do? We left everything behind."
The SDF launched the drive towards Raqa on Saturday, upping pressure on the jihadists three weeks after Iraqi forces began their assault on Mosul.
Raqa and Mosul are the last major cities in Syria and Iraq under IS control, after the jihadists suffered losses that greatly reduced the size of the self-styled "caliphate" they declared in mid-2014 following their seizure of large parts of both countries.
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