Yemen's exiled Vice President Khaled Bahah announced the "liberation" of second city Aden after four months of devastating fighting between loyalist forces and Iran-backed rebels.
"The government announces the liberation of the province of Aden on the first day of Eid al-Fitr which falls on July 17," Bahah said on his Facebook page, referring to the Muslim holiday marking the end of the fasting month of Ramadan.
"We will work to restore life in Aden and all the liberated cities, to restore water and electricity," he said.
On Tuesday, loyalist forces launched Operation Golden Arrow against Iran-backed rebels who seized control of much of Aden in March, forcing the government into exile in neighbouring Saudi Arabia.
The counter-offensive was carried out by southern militiamen of the Popular Resistance, backed by reinforcements freshly trained and equipped in Saudi Arabia.
The oil-rich kingdom leads a coalition of Arab countries which has been waging an air campaign against the Huthi Shiite rebels and renegade troops loyal to ousted president Ali Abdullah Saleh.
Aden was President Abedrabbo Mansour Hadi's last refuge after he fled the capital Sanaa earlier this year as the rebels took over the government and launched an offensive in which they seized much of the rest of the country.
Swathes of the city have been reduced to rubble by the four months of ferocious fighting.
The exiled government's official news agency said loyalist forces had mopped up the last pockets of rebel resistance in the city's Mualla district on Thursday. They already secured the airport and the surrounding Khormaksar diplomatic district earlier this week.
In a televised speech to mark the Eid al-Fitr holiday, the exiled president paid tribute to loyalist fighters and vowed that Aden would be the stepping stone to victory nationwide.
"Aden will be the key to Yemen's salvation," Hadi said in the speech broadcast late on Thursday. "From Aden we will regain all of Yemen."
The loyalist counter-offensive came after the failure of a UN-declared truce that was supposed to have taken effect last weekend to allow the delivery of desperately needed relief supplies.
The United Nations has declared Yemen a level-3 humanitarian emergency, the highest on its scale.
More than 21.1 million people -- over 80% of Yemen's population -- need aid, with 13 million facing food shortages, while access to water has become difficult for 9.4 million people.