Islamic State seized Palmyra in a surprise advance in December, after having been driven out eight months before.
"With backing from the Syrian and Russian air forces, units of our armed forces recaptured the city of Palmyra, in cooperation with the allies," the military said in a statement.
Mass grave of victims of Islamic State found in Syria's Palmyra
The army and Iranian-backed militia advanced inside Palmyra on Thursday as Islamic State withdrew completely, the Syrian Observatory for Human Rights, a Britain-based war monitor, said.
Islamic State militants retreated to areas in the east, the Observatory reported. Government forces took control of swathes of Palmyra and conducted combing operations to clear mines on Thursday, it said.
During Islamic State's first occupation which ended in March last year, the ultra-hardline militant group destroyed some of Palmyra's priceless archaeological heritage. It is believed to have razed other parts of the historical ruins after regaining control in December.
The Syrian army is also fighting Islamic State east of Aleppo city, where it is pushing to reach the Euphrates River, and in the city of Deir al Zor, where it controls an enclave besieged by the militants.
Islamic State militants blow up Palmyra's ancient tower tombs: Syria's antiquities chief
Islamic State is on the back foot in Syria after losing territory in the north to an alliance of US-backed, Kurdish-led militias, and to Turkey-backed Syrian rebel groups.
Government and opposition delegations are attending UN-sponsored peace talks in Geneva, where the government's chief negotiator hailed Syrian President Bashar al Assad for keeping his promise to retake Palmyra.
The Syrian opposition, however, declined to congratulate Assad on capturing Palmyra and suggested the sight of the city changing hands again was risible.
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