The rebels had by late on Friday taken control of Tasil in Deraa province that is near the Jordanian border and the Israeli-occupied Golan Heights, the source and the British-based Syrian Observatory for Human Rights said.
They drove out fighters from the Yarmouk Martyrs’ Brigade and the Muthanna Movement, which they said were groups loyal to Islamic State.
“Our battle continues against them, until we have cleansed the area of them,” said Abu Ghiath al-Shami, a spokesman for the Alwiyat Seif al-Sham group that is part of a rebel alliance in the south.
He described the latest attacks against the hardline jihadists as a “widened campaign against Daesh”, using an Arabic acronym for Islamic State.
It was the second blow dealt by insurgents fighting against Islamic State or Islamic State-linked fighters in as many days.
In a separate assault in the north of the country near the Turkish border on Thursday, rebel forces took over a town that had been the main stronghold of Islamic State in the northern Aleppo countryside.
A cessation of hostilities agreement in Syria that began on Feb. 27 has slowed fighting in some areas in western Syria but has not halted the violence. Islamic State and the al Qaeda-linked Nusra Front are not included in the truce.
The Syrian army and its allies, backed by Russian air power, are separately fighting against Islamic State.
Clashes between the government and non-jihadist rebels have continued in some areas during the ceasefire.