Backed up with attack helicopters, US forces searched al-Arabi quarter of the Kurd-majority city after receiving a tip-off that the deposed president was hiding in the area.
One resident told journalists: "The word in town is that Saddam is there [al-Arabi]."
Fighters from the Patriotic Union of Kurdistan (PUK) captured former vice president Taha Yasin Ramadan in Mosul on 18 August before handing him over to American officials the following day.
US occupiers also killed Hussein’s sons Uday and Qusay, and the latter's 14-year-old son Mustafa, in a raid on a villa in Mosul on 22 July.
Hussein’s whereabouts have been unknown since 9 April, but Mosul has been raided many times in recent weeks for the ex-president.
Aljazeera and al-Arabiya have both aired audiotapes, deemed authentic by US intelligence, which urge all Iraqis to resist occupation.
Wanted dead or alive
In one taped message dated 14 June, Hussein said he was still in Iraq and warned Americans of more bloodshed. "I am in Iraq and with a comrade... I tell you that I miss you, miss you, oh beloved people, even though I am among you and in your ranks.”
Former Iraqi military intelligence chief, Wafiq al-Samarrai, told Aljazeera the voice and the expressions used were those of the deposed Iraqi leader.
Al-Samarrai added he believe Hussein was alive and living in Iraq, moving around an area between Baghdad and Samarra, around 125 km north of the capital.
Another tape, coinciding with US Independence Day, came a day after the occupation authority in Iraq offered a reward of $25 million for information leading to the deposed president's capture or death.