IS fighters were cut off in Al-Bab after government forces loyal severed a road into the northern town.
IS fighters were cut off in Al-Bab after forces loyal to the government of President Bashar al-Assad severed a road into the northern town, the Syrian Observatory for Human Rights reported.
"Al-Bab is now completely besieged by the regime from the south, and the Turkish forces and rebels from the east, north and west," said the Britain-based monitor.
It came after "the regime's forces and allied militia seized the only and last main road used by the jihadists between Al-Bab and Raqa," Observatory chief Rami Abdel Rahman told AFP, referring to the jihadists' de facto capital in Syria.
Regime forces were backed by fighters from Lebanese Shiite movement Hezbollah and by Russian artillery, said the Observatory, which relies on a network of sources on the ground for its reports.
The town of Al-Bab, 25 kilometres (15 miles) south of the border with Turkey, is seen as a prize by nearly all sides in the complex war.
Since December, Turkey-backed rebel fighters known as the Euphrates Shield alliance have edged towards Al-Bab from the north.
In January, Turkey's air force began carrying out joint bombing raids around Al-Bab with Assad's ally Russia.
The two parties back opposing sides in the war but have joined forces in recent months to try to bring an end to the conflict.
Assad's regime has refocused on IS since fully recapturing Aleppo city in December, in the biggest blow to rebel forces fighting to topple his regime for nearly six years.
IS is among several jihadist movements that have shot to prominence during the conflict, which has left more than 310,000 people dead and has forced millions more from their homes.
Assad's forces were also locked in fighting with IS in the central province of Homs at the weekend, the Observatory said.
It reported that the troops had captured the Hayyan oilfield west of the celebrated desert city of Palmyra.
They also fought back against IS around Al-Seen military airport northeast of Damascus, said the monitoring group.
IS is facing simultaneous offensives in Syria and Iraq against its self-proclaimed Islamic "caliphate".
On Saturday, US-backed Kurdish and Arab fighters announced a new phase in their campaign to capture Raqa, but said they needed more weapons to win.
The Syrian Democratic Forces launched their offensive for the key jihadist stronghold in November and have taken some ground further up the Euphrates Valley but are still some distance away.
SDF fighters have received training and air support from the US-led coalition against IS. Last week Washington said it had provided them with armoured sports utility vehicles for the first time.
US President Donald Trump, who made fighting "radical Islamic terrorism" a central plank of his election campaign, was due to visit US Central Command on Monday, meeting officers who will spearhead his new strategy to defeat IS.
The military command plays a key role in Operation Inherent Resolve -- the US-led mission to "degrade and defeat" IS -- which has resulted in 17,861 strikes across northern Syria and Iraq since August 2016.
In late January, Trump ordered generals to begin a 30-day review of the US strategy to defeat the jihadist group.