Hundreds of ground forces battled Taliban fighters before entering the town of Garmser in the Helmand province on Wednesday, said General Rahmatullah Roufi, the Afghan army commander in the country's south.
"Our troops launched an attack on Garmser and thank God we captured it," Roufi told The Associated Press.
The operation in Garmser, a town of more than 50,000 on the Helmand River, followed a similar offensive the day before to root out Taliban fighters from Naway-i-Barakzayi, about 30km to the north.
Lieutenant Colonel Paul Fitzpatrick, a US spokesman, said Afghan and coalition forces "skirmished" with Taliban fighters outside Garmser "but met no resistance once inside".
Two Afghan soldiers were wounded in the operation.
Coalition forces met town leaders to try to hunt down the Taliban members who fled, Fitzpatrick said.
"The Taliban appears to be bullying their way around some of the smaller towns in remote areas but they have no capability to lay claim to any piece of ground," Fitzpatrick said.
Recent fighting and drought has forced up to 4,000 residents to flee from villages in Afghanistan's southern Helmand province.
More than 2,000 people had fled from recent battles in districts of Helmand province and sought refuge in the capital Lashkar Gah.
The town only defence had been 40 poorly-armed policemen, who had been holed up in a concrete compound for more than two weeks
Afghanistan has about 60,000 policemen and less than 30,000 soldiers, plus more than 30,000 US-led and Nato forces.
There are plans to increase the Afghan army's size to 70,000, but defence officials have said at least double that number is needed.
"There are challenges because at the moment there are a finite number of security forces, Afghan and coalition, and the real solution is providing Afghan security and that has to be grown," Fitzpatrick told The AP.
The dilemma for Afghan and coalition forces is countering the Taliban tactic of striking far-flung towns with a limited security presence and then blend back into the desert and local communities before resurfacing elsewhere.
An Afghan security official accused Pakistani Islamist groups of helping the Taliban fighters to chase police from the two towns in the south, where thousands of US, British, Canadian and Afghan soldiers have been battling the worst surge in the Taliban violence since the regime was toppled in 2001.
Pakistan says it is doing all it can to crush insurgents and has deployed 90,000 troops along the 2,350km border.
Local politicians have asked Hamid Karzai, the Afghan president, to do more to stop insurgents crossing the porous border with Pakistan.
Helmand, one of Afghanistan's most volatile regions, is dotted with small villages and towns linked by long, remote highways that provide ideal ambush sites for fighters.
About 4,000 British troops, part of an expansion of Nato forces into the region, are being deployed at the end of the month to take over from US forces.