In Tawahi, the flag has been hoisted over the police station and is flown on cars ferrying bearded men across one of the largest districts of the port city, residents say.
"Armed men of Al-Qaeda control our whole district, even if there are only a few dozen of them," said Raefat, a 32-year-old employee of Yemeni radio and television.
"It's no surprise given there's no state or government," he said.
Prime Minister Khaled Bahah and his team returned to Riyadh after a deadly October 6 attack claimed by the Islamic State jihadist group on an Aden hotel that was being used to house the government.
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A government security official told AFP that the jihadists are active in several areas "like Crater, Khor Maksar and Brigua, where their presence is growing stronger by the day".
The official, declining to be named, said he "fears the city will fall under their total control in the absence of the state".
Three months later, hundreds of young gunmen now control most public buildings in the city, according to residents, contacted from Sanaa.
They claim allegiance to the pro-government "Popular Resistance", a loose coalition of former regular army soldiers, tribal militias, Islamists and southern secessionists.
The coalition has battled against the Iran-backed Huthis but without necessarily pledging loyalty to President Abedrabbo Mansour Hadi, also exiled in Saudi Arabia.
Aden police chief General Mohamed Mussaed says his men are "cooperating with our Popular Resistance brothers to resolve the security problem and restore police posts... A big challenge".