Mozambique President Filipe Nyusi on Tuesday announced that the country's armed forces, with the help of Rwanda and the Southern African Development Community (SADC) forces, have reclaimed nearly all areas that were seized by militants in Cabo Delgado province.
President Nyusi said some locals are returning to their homes.
The leader was speaking during an event to celebrate The Day of Victory, marking 46 years since the Portuguese colonial army was expelled from the Southern African country.
President Nyusi said leaders of the terrorist group consists of nationals from Tanzania, Democratic Republic of Congo, Somalia, Rwanda and Kenya, who "recruit Mozambicans for their activities".
The Cabo Delgado insurgency has displaced over 800,000 people and is threatening billions of gas projects by multinationals in the region.
Mozambique has been battling terrorists calling themselves Al-Shabaab, whom the US has designated as Islamic State affiliates.
Northern Mozambique is seen as the latest haven for terrorists from Kenya, Tanzania, Uganda, Somalia, Yemen, the Democratic Republic of Congo and Rwanda.
Mocimboa da Praia was a major stronghold of the insurgency for more than two years.
The port town, from where the first Islamist attacks were staged in October 2017, has since last year become the de-facto headquarters of the Islamic State-linked extremists, locally referred to as Al-Shabab.
On Friday, the Southern African Mission in Mozambique (SAMIM) confirmed that the Standby Force of the SADC has begun operations on August 9 and that the contingent is fully operational.
In July, SADC countries started deploying forces to Mozambique to counter the terrorists. The SADC mission was supposed to last 90 days.
Rwanda was the first to send 1,000 troops to Mozambique, Botswana followed with a contingent of 296 while South Africa deployed 1,500 soldiers.
Zimbabwe also sent 304 military instructors to train Mozambican soldiers to fight the insurgents.
Last month, Mozambique's main opposition party leader warned the government of the risk of insurgents in Cabo Delgado province opening new bases after the retaking of Mocímboa da Praia.
"Mozambican forces must be very careful because when a guerrilla leaves a place, they will settle in another place," said Mozambican National Resistance leader Ossufo Momade,
On August 28, the SAMIM forces captured a rebel and recovered vehicles, weapons and documents.
"The captured insurgent was later handed over to the FDS and the documents shared with other forces to exploit information,"
Meanwhile, SAMIM lamented the loss of a soldier from Botswana and another from Tanzania on the ground due to accidents.