The SDF seized Tabqa and the nearby dam on Wednesday and was conducting clearance operations on Thursday morning.
The Syrian Democratic Forces scored one of their biggest victories against IS as controversy intensified over a US decision to arm the alliance's Kurdish component.
The SDF seized Tabqa and the nearby dam on Wednesday and was conducting clearance operations on Thursday morning, the Syrian Observatory for Human Rights said.
"The SDF were able to deploy onto the dam itself during the night," Observatory head Rami Abdel Rahman said.
"But civilians are still unable to enter some parts of Tabqa because of explosives" left by IS, he added.
Situated on the Euphrates River about 55 kilometres (35 miles) upstream from Raqa, Tabqa is a key waypost in the operation to capture the jihadists' de facto Syrian capital.
Operation Wrath of the Euphrates has seen the SDF capture large swathes of territory north of Raqa and at their closest point its fighters are just eight kilometres (five miles) from the city.
They are now working to tighten the noose before a final assault.
The offensive has been supported by bombing raids by a US-led coalition, as well as coalition military advisers on the ground.
The battle for Tabqa was marked by fears that fighting could damage the nearby dam -- Syria's largest -- with the potential for catastrophic flooding.
Technicians fled the dam as fighting intensified in recent days, a source who works closely with them told AFP.
A repair team was on standby on Thursday, awaiting permission from the SDF to enter and assess any damage to the structure.
The SDF is dominated by the Kurdish People's Protection Units (YPG), seen by the US as an indispensable ally in the fight against IS but considered a "terrorist group" by Turkey.
The YPG posted footage on Thursday of half a dozen fighters and children dancing in Tabqa.
Another video showed a group of children calling out excitedly: "The dam has been liberated."
Washington has stepped up its support for the YPG in recent days, announcing that it would arm the Kurdish fighters in a break with its previous policy of arming only the SDF's Arab fighters.
The move has infuriated NATO ally Ankara.
The US-led coalition said a first consignment of weapons was already in place for delivery and could be dispatched to the Kurds "very quickly."
The arms include heavy machine guns to be used against IS truck bombs, mortars, small arms and ammunition, as well as armoured vehicles and equipment to detect landmines, coalition spokesman Colonel John Dorrian said.
"Every single one of these weapons that are being provided to our partner force, we intend to account for them, and to ensure that they are pointed at ISIS," he added, referring to IS.
But Washington's reassurances failed to assuage Ankara, which regards the YPG as the Syrian arm of the Kurdistan Workers' Party (PKK), which has waged a deadly insurgency inside Turkey since 1984.
"YPG and PKK are both terror groups, there is no difference at all between them. They only have different names," said Turkish Foreign Minister Mevlut Cavusoglu.
The dispute over arming Syria's Kurds poisoned ties between the NATO allies under Barack Obama, and Ankara had hoped for smoother ties with the Donald Trump administration.
The issue is set to dominate talks between Turkish President Recep Tayyip Erdogan and Trump next week, the first meeting between the two heads of state.
"I hope very much that this mistake will be reversed immediately," Erdogan said on Thursday.
"I will personally express our worries in a detailed way when we talk with President Trump on May 16," he said, adding that he would also raise the issue at a NATO summit on May 25.