Officials told al-Jazeera that the peshmerga captured Tel Skuf, about 15km east of the Mosul dam, from the so-called Islamic State of Iraq and the Levant (ISIL) terrorists early on Sunday morning.
The town is one of several seized by ISIL - a group of self-declared extremists who have captured large swaths of land in northern Iraq and neighboring Syria.
Peshmerga forces have also retaken the towns of Ashrafia and Batnaya.
Their progress was reportedly slowed down by explosive devices, including homemade bombs and landmines, placed by the ISIL militants.
They're meant to target fighters, weapons and armored vehicles the ISIL militants seized from the Iraqi army - originally American weaponry, said al-Jazeera's Jane Arraf, reporting from Erbil, the capital of the Kurdish autonomous region. "While they're able to take out major targets, they don't manage to get rid of militants around or inside the facilities."
The Mosul dam fell under control of ISIL militants earlier this month. Control of the dam could give the terrorists the ability to flood cities and cut off vital water and electricity supplies.
On June 10, the ISIL militants took control of Mosul, the capital of Nineveh Province, which was followed by the fall of Tikrit, located 140 kilometers (87 miles) northwest of the capital, Baghdad.
NTJ/HH