Regime forces retook Tulul al-Safa, between the provinces of Damascus and Sweida, "after IS fighters withdrew from it and headed east into the Badia desert", the Britain-based Syrian Observatory for Human Rights said.
Regime forces have been fighting the jihadists in the area since a deadly July attack on the Druze minority in Sweida province.
In recent weeks, air strikes on the Tulul al-Safa pocket had increased and hundreds of regime fighters were sent as reinforcements, the Observatory said.
In the July 25 attack, IS killed more than 250 people, most of them civilians, in a wave of suicide bombings, shootings, and stabbings across Sweida province.
The jihadists also kidnapped around 30 people -- mostly women and children -- during the deadliest assault on Syria's Druze community in the seven-year civil war.
Twenty-three of the hostages have since returned home, while the remainder appear to have died or been executed by the jihadists.
The province is the heartland of the country's Druze minority, which made up roughly three percent of Syria's pre-war population -- or about 700,000 people. Followers of a secretive offshoot of Islam, the Druze are considered heretics by the Sunni extremists of IS.
But the jihadist group has since lost most of it to various offensives in both countries.
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