Al-Nusra Front and its Islamist allies "control the majority of neighbourhoods in Idlib, apart from government and security buildings," Rami Abdel Rahman, director of the Syrian Observatory for Human Rights, told AFP.
Street fighting raged through the night after the rebels entered the government-held city yesterday evening.
"Regime forces have retreated and are now in their barracks," Abdel Rahman said.
Idlib province, which borders Turkey, is a bastion of Al-Nusra, with only Idlib city itself remaining under government control.
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On Tuesday, a new coalition of Islamist rebels launched a coordinated attack against Idlib.
Calling itself "The Army of Conquest," the coalition is led by Al-Nusra and includes several other groups.
At least 71 people were killed as the jihadists seized regime checkpoints on the outskirts of Idlib on Thursday.
According to Abdel Rahman, the Syrian army had sent in reinforcements and carried out air strikes on rebel positions on the outskirts of the city.