"After heavy fighting during the night, the army is in full control of Palmyra -- both the ancient site and the residential neighbourhoods," the source said.
IS fighters pulled out, retreating to the towns of Sukhnah, Raqa and Deir Ezzor to the east.
"Army sappers are in the process of defusing dozens of bombs and mines planted inside the ancient site," the source added.
IS overran the Palmyra ruins and adjacent modern city in May 2015, sparking a global outcry and fears for the UNESCO world heritage site known as the "Pearl of the Desert".
The group has since blown up two of the site's treasured classical temples, its triumphal arch and a dozen tower tombs.
It used Palmyra's ancient amphitheatre as a venue for public executions, including the beheading of the city's 82-year-old former antiquities chief.
The oasis city's recapture is a strategic as well as symbolic victory for President Bashar al-Assad, since it provides control of the surrounding desert extending all the way to the Iraqi border, analysts say.
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