Speaking to NTV television, Defence Minister Fikri Isik said half of the town of Al-Bab was in the hands of Turkish troops and allied pro-Ankara Syrian rebels, after the government repeatedly said it was "largely under control".
Since launching its unprecedented incursion into Syria in August, Turkey has been focusing on Al-Bab as the last bastion of IS extremists in Aleppo province.
But the battle for the town has been fierce, with most of the 69 Turkish soldiers killed in the Syria campaign dying there.
"More than half of the town is now in our hands," he said, indicating that the operation to surround Al-Bab was "over" with troops now moving from district-to-district to "clean up" the town.
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"Until this clean-up inside is completed, it's impossible to say that our work is over," he added.
Rebel commanders on the ground told AFP troops were facing fierce resistance, with IS using snipers and laying roadside bombs.
But Rami Abdel Rahman, head of the Syrian Observatory for Human Rights, told AFP in Beirut that Turkish troops and allied rebels controlled only 25 percent of Al-Bab, with some 700 jihadists still fighting there.
But Ankara has vigorously denied claims that innocent lives have been lost, insisting it does its best to avoid civilian casualties.