Syrian Democratic Forces (SDF), backed by the United States, were met with fierce opposition as they began their last attack on territory held by the so-called Islamic State on Saturday night.
The jihadists defending their last stronghold in eastern Syria are "the most experienced," said SDF spokesman, Mustafa Bali.
He told AP news agency overnight: "The battle is very fierce. Those remaining inside are the most experienced who are defending their last stronghold. According to this, you can imagine the ferocity and size of the fighting."
SDF troops, led by Kurdish fighters, have been holding out for the past 10 days.
Bali said on Saturday this would be the final assault on the remaining two villages "to crush IS".
"Our forces have started the final battle to eliminate the last remnants of the ISIS terrorist organisation," he said in a tweet.
The offensive aimd to regain control of Al-Baghuz, near the Iraqi border.
In the past week and a half, more than 20,000 civilians have been evacuated from the besieged area.
This latest battle comes just days after US President Donald Trump announced that the terrorist group would be stamped out by "next week."