The recapture of Morek, 30km (19 miles) north of Hama, is part of the military's campaign to shore up territory in the west of the country stretching north from Damascus as U.S.-led forces bomb ISIS elsewhere in Syria.
The army "took full control of the town of Morek in the northern Hama countryside and killed a number of terrorists and mercenaries," state television said in a news alert, citing a military source.
The town is significant because it sits on the main route between two of Syria's most populated cities.Syrian army has intensified air raids on western areas in the past month and has been making incremental gains on the ground.
Hundreds of rebels killed in months of battles for the town including some from AL Qaeda linked Nusra Front, said Rami Abdulrahman of the Syrian Observatory for Human Rights monitoring group.
The military took control of the town late on Thursday after heavy shelling and air strikes in the area which killed many rebels, according to the Observatory.
The hardline ISIS group is trying to capture the Syrian town of Ayn al-Arab, known as Kobani close to the Turkish border from Kurdish YPG and the battle has become the focus of international attention.
An intensified military campaign by Syrian army is stoking fears among his opponents that the government is taking advantage of the U.S. raids on ISIS to attack other foes.