The fall of the town, which the Pentagon played down as a minor setback, came as IS extremists launched an unsuccessful assault involving suicide bombers on the nearby Al-Asad air base.
"We do assess that right now they have control of Al-Baghdadi," Pentagon spokesman Rear Admiral John Kirby told a news conference, adding IS took hold of the town "in the past several days."
The town is located in Anbar province, about five miles (eight kilometers) from the Asad air base, where about 300 US Marines are stationed to assist Iraqi government troops.
Iraqi soldiers repelled the IS group's assault on the base on Friday which involved several suicide bombers, officials said.
A group of 20-25 IS fighters, most of them wearing Iraqi army uniforms, carried out the failed attack, which appeared designed to have been an initial wave of suicide bombings followed by gunmen storming in, Kirby said.
All of the militants were killed or died when detonating suicide bombs.
Kirby said that "at no time were US troops anywhere near the fighting," which was about two miles away from where the Americans were working at the sprawling complex.
American surveillance aircraft tracking the IS extremists assisted the Iraqi army forces and Apache attack helicopters were sent in but did open fire, officials said.
US-led coalition aircraft carried out five air strikes in the area over the past 24 hours, roughly 15 kilometers from the Asad base, but those were not related to the brief firefight with the IS militants at Asad, officials said.
"There were no aircraft involved in beating back this," Kirby said. "The Iraqi security forces did this on their own."
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An Iraqi army colonel and a defense ministry official said the botched attack involved at least seven would-be suicide bombers using a military vehicle.
- Under pressure -
Al-Baghdadi had been under growing pressure for months and was one of the few towns that had remained under the Iraqi government's control in the predominantly Sunni province.
But the Pentagon said the capture of the town did not represent a major setback in the war effort against the Islamists who have overrun large areas of Iraq and Syria.
"This is arguably the first in at least a couple of months, if not more, where they (IS) have had any success at all at taking any new ground," Kirby said.
"So this is an enemy that we still assess to be in a defensive posture."
He added: "It's one town. It's not all of Anbar. It's not all of Iraq.
"We need to keep it in perspective."
US officials have said it will take some time before Iraqi troops are trained and ready to stage a major counter-offensive in Anbar province, where much of the Sunni population has become alienated from the Shiite-led leadership in Baghdad.
Washington is pinning its hopes on Iraqi government plans to build up a militia among the Sunni tribes in the area against the IS jihadists.