Over 90,000 civilians have been trapped there on the western banks of the Euphrates River since 2015.
Cruise missiles have been fired from a Russian warship in the Mediterranean against IS targets in the eastern Syrian province of Deir al-Zor.
The Syrian army and its allies had made rapid advances in recent days and pushed through IS lines with the help of heavy artillery and Russian air strikes.
Now, lifting the siege of the city where IS has ruled parts since early 2015 marks another victory for President Bashar al-Assad.
Government forces have advanced on several fronts against IS and other groups over the past year.
Syrian army spokesman Brigadier General Ali Mayhoub has praised the latest advance.
"Units of our armed forces have accomplished, with the cooperation of the armed forces and with the air support of the Syrian and Russian air forces, the second phase of their military operation in the Syrian Badiya (Desert) and were able, through their brave and special operations, to break the siege on our besieged people after three years in Deir al-Zor."
It also marks an end to a humanitarian crisis for tens of thousands of people who survived on erratic airdrops of food and supplies during the 32-month siege.
"I'm very happy today, because the road was opened after three years of siege. Life was very difficult during these three years. Finally, the city was liberated, thanks to the Syrian government, President Bashar Assad and the Russian government that helped a lot to open the road, thanks to Colonel Suheil and his forces who breached the siege."
Deir al-Zor is one of the last significant IS strongholds in Syria.
Further north-west, Raqqa -- the de facto capital of what IS calls its "caliphate" -- remains under siege from a US-backed alliance of Kurdish and Arab fighters.
And in neighbouring Iraq, government forces have recently driven IS from the cities of Mosul and Tal Afar, leaving it with only two footholds in the country.
For many residents of Deir Al-Zor, rebuilding their lives is now the priority.
"I'm happy, I'm happy. Thank God. Now we can return to our province and rebuild our country that was destroyed. And we will be relieved from IS, which is the most important thing."
And for others who watched Syria's World Cup football qualifier against Iran, it is also a matter of national pride.
"I wish our country to move from one victory to another, a victory in sports and another one against every foreigner and enemy. We are now optimistic about our football team, army and every citizen."
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