The Yemeni military has recaptured the southern city of al-Shaqra, considered a stronghold of the Al Qaeda.
This is the third city retaken from militants who had captured them more than a year ago.
Among the retreating militants was Jalal al-Baleidi, also known as Abu Hamza al-Zinjibari, leader of the Ansar al Sharia (Partisans of Islamic Law) group in Abyan.
The US has helped the government offensive that began more than a month ago. Government troops have taken back militant strongholds of Jaazr and Zinjibar.
Yemeni soldiers killed 40 militants Thursday.
The US has used drones and military training to help Yemen combat Islamist militants.