Local forces loyal to Yemeni President Abd Rabu Mansour Hadi Monday took control of government buildings in the south-eastern provincial capital of Mukalla after al-Qaeda forces withdrew overnight, residents said.
The militants pulled out without fighting under a deal reached with city officials after the loyalist forces arrived at Mukalla's outskirts the previous day, locals told dpa.
The extremist group took advantage of the civil war between mainly Shiite Houthi rebels and their opponents, including Hadi loyalists, to gain control of the city a year ago.
Residents said dozens of al-Qaeda fighters and seven civilians were killed in Saudi-led air raids before the jihadists pulled out.
The developments came two days after Saudi-backed government forces launched a massive offensive to drive al-Qaeda insurgents out of the southern city of Zinjibar.
Zinjibar had been under al-Qaeda's control since December.
Yemen is home to al-Qaeda in the Arabian Peninsula (AQAP), seen as one of the terrorist network's most active branches in the world.
AQAP has expanded its long-standing presence in the impoverished country during the civil war, joining local forces in the fight against the Houthis while also seizing control of territory behind their lines.
UN-sponsored talks, aimed at ending the war, are under way in Kuwait between representatives of the Hadi government and the rebels.
The UN Security Council welcomed the launch of the peace talks and called on all parties to "engage in peace talks in a flexible andconstructive manner without preconditions, and in good faith," according to a statement issued Monday.
The council expressed "strong concern" about intensified terrorist activity in the region, including attacks by al-Qaeda on the Arabian Peninsula.
"The Security Council ... encourages all Yemeni parties to avoidany security vacuums that can be exploited by terrorists or other violent groups," the statement said.
Yemen's conflict has intensified since March 2015 when the rebels advanced on the southern city of Aden, prompting Saudi Arabia and fellow Sunni allies to start an air campaign in Yemen against the group.
Saudi Arabia fears that the rebels will give its regional rival, Shiite Iran, a strategic foothold on the Arabian Peninsula.