French Prime Minister Jean-Marc Ayrault said their troops, having captured Gao, were advancing on Timbuktu, another key town in the vast northern desert region held for 10 months by al Qaeda-linked rebels.
Washington's decision to step up its role in the conflict by helping refuel French warplanes was a vital boost to the campaign.
French airstrikes were what forced the Islamists from their strongholds in the north, clearing the way for the ground offensive.
Saturday's seizure of Gao, the most populated town in Mali's northern region, which is roughly the size of Texas, was announced by the French defence ministry and confirmed by Malian security sources.
Ayrault said the troops were currently "around Gao and (will be) soon near Timbuktu," further west.
A fabled caravan town on the edge of the Sahara desert, Timbuktu served as a centre of Islamic learning for centuries.
"The objective is that the African multinational force being put together be able to take over, and that Mali be able to begin a process of political stabilisation," Ayrault said.
A Malian security source in Gao told AFP by telephone that a first contingent of Malian, Chadian and Niger troops had arrived in Gao to help secure it, having been flown in from Niamey, capital of neighbouring Niger.
Other soldiers from Chad and Niger were moving by land toward the Malian border from the Niger town of Ouallam, which lies about 100 kilometres southeast of Gao.
Washington's decision to agree to France's request for air refuelling facilities came after two weeks of deliberation.
US defence secretary Leon Panetta gave the news to his French counterpart, Jean-Yves Le Drian in a telephone conversation Saturday, a Pentagon spokesman said.
They also discussed plans for the Americans to transport troops from African nations, including Chad and Togo, to facilitate the international effort in Mali.
President Barack Obama made his support for the French operation clear in a phone conversation Friday with French President Francois Hollande.
The US military has an unparalleled fleet of more than 400 tankers equipped to refuel fighters and other warplanes in mid-air. France has about 14 such tankers.
Slow deployment of regional forces
French-led forces took Gao from the al-Qaeda-linked Movement for Oneness and Jihad in West Africa (MUJAO), one of the Islamist groups that for 10 months have controlled northern Mali.
In April last year after a coup in Bamako, an alliance of Tuareg rebels seeking an independent homeland in the north joined forces with several Islamist groups, seizing Gao, Timbuktu and Kidal.
The Islamist quickly sidelined the Tuaregs imposing a harsh version of Islamic sharia law in the region.
Transgressors were flogged, stoned and executed, they banned music and television and forced women to wear veils.
Groups involved include al-Qaedain the Islamic Maghreb, the MUJAO, which is an offshoot of AQIM and the homegrown group Ansar Dine.
Mali was expected to be top of the agenda at the African Union (AU) summit in the Ethiopian capital Addis Ababa opening Sunday.
On Saturday, West African defence chiefs meeting in Ivory Coast agreed to boost the their troop pledges for the force to 5,700 from the previous 4,500.
Chad, which neighbours Mali but is not a member of the Economic Community of West African States (ECOWAS) raising the force, has promised an additional 2,000 soldiers.
So far however, only a fraction of the African troops have arrived in Bamako, the Malian capital in the south of the country. French and Malian forces have done all the fighting to date.
The AU last week agreed to seek help from the United Nations with transport, medicine and field hospitals for the African-led force in Mali, or AFISMA.
France has already deployed 2,500 troops to Mali and its defence ministry says 1,900 African soldiers are on the ground there and in Niger.
Aid agencies have shown concern about the growing food crisis for civilians in the vast semi-arid north of Mali and the drought-stricken Sahel as a whole.