The Hashed al-Shaabi (Popular Mobilisation) forces announced the "total liberation" of Al-Baaj district "with support from the air force".
"The Iraqi flag has been hoisted above its buildings," said a statement from the Hashed, an umbrella organisation for pro-government paramilitaries that is dominated by Iran-backed Shiite militias.
The Hashed on May 12 launched an operation to retake the Qayrawan and Al-Baaj areas west of Mosul, the country's second city that is the target of a massive anti-IS operation.
Both areas are in Nineveh, the province of which Mosul is the capital, and lie between territory under IS control in Iraq and Syria.
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The jihadists took over large swathes of territory of Iraq and Syria in 2014, but have since faced offensives on several fronts in both countries.
Iraqi forces backed by the US-led coalition have since October been battling to oust IS from Mosul.
They are advancing on the last areas of the city still held by IS, but the presence of large numbers of civilians is slowing their progress.