The Saturday announcement came after heavy fighting between Iraqi forces and the al-Qaeda-linked insurgents over the control of Sulaiman Bek for more than a week.
On February 13, militants overran parts of Sulaiman Bek, setting off a cycle of clashes in the area which includes a town and several villages.
Sulaiman Bek "has now been completely liberated, and there are no longer any gunmen, just police and soldiers", said a local official, Talib al-Bayati.
The army was reinforcing the area with watchtowers and sand barriers, Bayati said.
Sulaiman Bek has been hit by numerous attacks over the past year, and was briefly seized by militants in late April.
In July, some 150 militants launched an attack with mortar rounds, rocket-propelled grenades and automatic weapons, and also executed 14 Shia truck drivers on a nearby highway.
Violence in Iraq has reached a level not seen since 2008, when the country was just emerging from a period of brutal sectarian killings.
RA/MB