The fall of the town, which the Pentagon played down as a minor setback, came as IS extremists launched an unsuccessful assault involving suicide bombers on the nearby Al-Asad air base.
"We do assess that right now they have control of Al-Baghdadi," Pentagon spokesman Rear Admiral John Kirby told a news conference, adding IS took hold of the town "in the past several days."
The town is located in Anbar province, about five miles (eight kilometres) from the Asad air base, where about 300 US Marines are stationed to assist Iraqi government troops.
A group of 20-25 IS fighters, most of them wearing Iraqi army uniforms, carried out the failed attack, which appeared designed to have been an initial wave of suicide bombings followed by gunmen storming in, Kirby said.
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All of the militants were killed or died when detonating suicide bombs.
Kirby said that "at no time were US troops anywhere near the fighting," which was about two miles away from where the Americans were working at the sprawling complex.
American surveillance aircraft tracking the IS extremists assisted the Iraqi army forces and Apache attack helicopters were sent in but did open fire, officials said.
"There were no aircraft involved in beating back this," Kirby said. "The Iraqi security forces did this on their own."
An Iraqi army colonel and a defence ministry official said the botched attack involved at least seven would-be suicide bombers using a military vehicle.
Al-Baghdadi had been under growing pressure for months and was one of the few towns that had remained under the Iraqi government's control in the predominantly Sunni province.