An AFP journalist saw fierce clashes pitting Iraqi government forces and allied militia against IS fighters in the town of Al-Ayadieh 15 kilometres (10 miles) north of Tal Afar.
Iraqi troops, police and special forces, allied with the Hashed al-Shaabi paramilitary coalition, took control of all districts inside Tal Afar on Sunday, a week after launching their latest offensive against an IS stronghold.
Clearing operations were continuing and Prime Minister Haider al-Abadi was expected to soon arrive in the city to announce its "liberation" from IS.
The jihadists launched three suicide car bomb attacks at Iraqi forces on Monday morning and smoke could be seen rising above the town from air strikes carried out in support of ground troops.
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The Iraqi advance against IS is backed by the US-led coalition that launched an air war against the jihadists in 2014, a few months after they seized control of large parts of Syria and Iraq.
In Iraq, the jihadist group now only controls the city of Hawija, about 300 kilometres (185 miles) north of Baghdad, and desert areas along the border with Syria.