Journalists saw the fighters raise a Kurdish flag and fire off celebratory gunfire in the centre of the town yesterday morning.
Kurdish militia fighters, known as peshmerga, launched a major offensive to retake the town and cut a key highway on Thursday.
US-led coalition air strikes supported the offensive, dubbed Operation Free Sinjar.
Peshmerga Major Ghazi Ali, who oversees one of the units involved in the offensive, said thousands of Kurdish fighters entered the town from three directions yesterday morning. They encountered minimal resistance, Major Ali said. He described the situation in the city as still dangerous, however, and warned that it was too soon to declare victory.
There is reason for caution. An earlier attempt to retake Sinjar, at the foot of Sinjar Mountain about 30 miles from the Syrian border, stalled in December and militants have since been reinforcing their ranks.
The fight to dislodge IS militants from the Kurdish town of Kobani in northern Syria, meanwhile, took about four months - despite hundreds of US air strikes backing up the Kurdish fighters.
Hundreds of pick-up trucks and sport-utility vehicles carrying Kurdish fighters were seen gathering at the entrance to Sinjar yesterday ahead of a planned push into the town centre.
Islamic State extremists overran Sinjar as they rampaged across Iraq in August 2014, leading to the killing, enslavement and flight of thousands of people from the minority Yazidi community. Its members follow an ancient faith that the Islamic State group considers heretical.
The US later launched an air campaign against the Islamic State militants, also known as Isil, Isis and, in Arabic, as Daesh.
Diar Namo, the 26-year-old deputy commander of the Peshmerga unit stationed there, said the skies above Sinjar were largely quiet overnight following intense coalition air strikes on Thursday.
From his frontline observation post, he said he saw little movement inside the city before Kurdish forces moved in.
“We saw more than 50 Daesh (fighters) flee overnight,” he said. “Before there were only 200 to 300 in the city.”
Officials with the US-led coalition estimated there were between 400 and 550 IS fighters inside Sinjar before the offensive.