Iraqi government forces have entered central Kirkuk, residents say, after taking key installations outside the disputed city from Kurdish fighters.
Witnesses told the BBC they saw federal forces entering the provincial government building.
Clashes were reported south of Kirkuk earlier in the day, while thousands of residents fled the city.
It comes three weeks after the Kurdistan region held a controversial independence referendum.
While Kirkuk is not inside Iraqi Kurdistan, Kurdish voters inside the city were allowed to take part.
Iraq’s prime minister has said the vote – in which residents of Kurdish-controlled areas, including Kirkuk, overwhelmingly backed secession – was unconstitutional.
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The Kurdistan Regional Government (KRG) insisted it was legitimate.
US officials said they were “engaged with all parties in Iraq to de-escalate tension”.