Security sources said on Friday that troops seized the last stronghold of Husain al-Huthi in the mountainous Saada province on Thursday after a month of fighting.
They said they are now conducting house-to-house searches for him.
More than 200 rebels and troops have been killed in fierce clashes in Saada, 240km north of the capital Sanaa, since the government launched a crackdown on al-Huthi on 20 June.
On Thursday, at least 40 people were killed in renewed fighting that erupted after efforts to mediate an end to the standoff failed.
Government sources say hundreds of al-Huthi supporters have been wounded or arrested or have surrendered to authorities in Saada.
The Yemeni Government accuses al-Huthi, leader of the Believing Youth group and a Zaidi Shia Muslim sect, of setting up unlicensed religious centres and of forming an armed group which has staged violent protests against the United States and Israel.
It has offered a $54,000 reward for his capture.
Government forces have been on
the trail of al-Huthi for months
However, critics of the army offensive say the accusations levelled against al-Huthi do not justify the number of poeple killed in the hunt for him.
Others say the Yemeni government is trying to curry favour with the US by eliminating Islamist opposition groups.
Anti-US sentiment is running high in Yemen over the presence of US troops in Iraq and the Israeli-Palestinian conflict.