Witnesses say Somali government forces are in control of Daynile, the last part of the Somali capital that was controlled by al-Shabab militants.
A local journalist confirmed the takeover to VOA Thursday. Somali government troops and African Union forces attacked the district in northern Mogadishu at dawn and seized control of the area after brief but heavy fighting.
Al-Shabab once controlled nearly all of Mogadishu but pulled most of its fighters from the city in August, after a government and AU offensive.
Meanwhile, Kenyan forces continue to advance across southern Somalia in an effort to hunt down members of the Somali insurgent group.
Kenyan army spokesman Emmanuel Chirchir says Kenyan troops have taken control of Ras Kamboni, a town on the Somali coast, and are closing in on Kismayo, an important base for al-Shabab.
Kenya blames the al-Qaida-linked group for the kidnapping of several foreigners in Kenyan territory -- an allegation al-Shabab denies.
On Thursday, Kenyan President Mwai Kibaki said his country would use "all measures necessary" to ensure Kenyan peace and stability, saying the military operation was meant to protect Kenyan sovereignty.
The Kenyan army said Wednesday that it has killed at least 73 militants since launching the incursion a few days ago.
A Kenyan security minister said the government will also conduct a sweep to catch suspected al-Shabab and al-Qaida sympathizers in Nairobi.
Some information for this report was provided by AP.