The Syrian Democratic Forces captured Tishreen Dam after intense clashes with IS, as well as seven villages along the river's eastern bank, spokesman Talal Sello told AFP.
He said dozens of IS fighters had been killed.
The dam, held by IS since 2014, helps generate electricity for large parts of the northern Aleppo province.
Backed by air strikes from a US-led coalition, the SDF launched its assault on IS-held towns along the eastern bank of the Euphrates late Wednesday.
Signup to our newsletter and follow us on Facebook and Twitter!
It was the alliance's second major operation, after clearing IS from some 200 villages in the northeastern province of Hasakeh.
Sherfan Darwish, spokesman for an Arab rebel group in the SDF, wrote online: "Congratulations to our peoples... the battles are ongoing, the operation is ongoing, and the victories are ongoing."
The Syrian Observatory for Human Rights also said the SDF had "cleared the eastern bank of the Euphrates and crossed the dam."
"The battles are now on the western bank of the river," said Observatory head Rami Abdel Rahman.
Formed in October, the SDF has scored a series of successes against IS in northeastern Syria and appears to be extending its operations further west.
It receives backing by the US-led air coalition striking IS in Iraq and Syria.