The insurgents backed by troops loyal to former president Ali Abdullah Saleh had seized Daleh last month as they expanded southwards, triggering deadly confrontations with Sunni tribes and southern fighters.
The pro-Hadi forces made their advance two months into a Saudi-led air campaign aimed at restoring the president to power.
"The whole city of Daleh is now under the control of the Popular Resistance Committees," an umbrella group of southern factions, local chief Saleh al-Mansub said.
Troops loyal to Saleh in the region had sided with the rebels.
Also Read
Meanwhile, coalition warplanes struck Huthi positions on Mount Sabr in the central province of Taez, and in the northwestern province of Hajja today, witnesses said.
In Aden, clashes continued between rebels and local fighters on the city's northern outskirts, witnesses said.
Hadi took refuge in Aden after he escaped house arrest in Sanaa in February, but he fled to Riyadh after rebels started closing in on the southern port.
Relief agency Oxfam warned today that at least 16 million people, or two thirds of the population, had no access to clean drinking water because of the conflict.
Meanwhile, Yemen's union of journalists said today that two reporters detained by the Huthis were killed the previous day in an air raid on a military base.
It denounced the rebels for holding the pair at a base that was repeatedly targeted, accusing them of "premeditated murder".