The Huthi Shiite rebels met little resistance as they swept into Hudeida, located 226 kilometres (140 miles) west of Sanaa, taking over its air and sea ports, the official said.
It came hours after President Abdrabuh Mansur Hadi named a new prime minister yesterday in a fresh bid to end the impoverished country's crippling political crisis.
"Huthi militants are deployed across vital installations, including the airport and the port," said the security official.
Military and rebel sources confirmed that Huthi militants were seen deployed across main roads in Hudeida.
Also Read
Huthi militiamen stormed into Sanaa on September 21, easily seizing key government installations, and they now man checkpoints and run patrols across the capital in almost total absence of the security forces.
Military sources had warned that the rebels were looking to take control of Hudeida and to extend their presence to the narrow Bab al-Mandab strait, which leads to the Suez canal.
Yemen has been wracked by political turmoil and sporadic violence since the 2012 toppling of strongman Ali Abdullah Saleh, with rebels and militants battling to exploit a power vacuum and seize control of territory.
Hadi yesterday named an envoy to the UN, Khalid Bahah, as the new premier, after the rebels rejected an earlier choice.
Bahah's nomination appeared to have the support of Huthi rebels, and the appointment of a neutral prime minister was seen as a key step in persuading them to withdraw from Sanaa.