The US lost eight soldiers during the fighting
The Taleban and Al-Qaeda fighters, who put up stiff resistance for a week and a half, are retreating in the direction of Pakistan, one Afghan commander said.
Troops entered the Shah-e-Kot Valley on Tuesday without meeting any resistance.
Gul Haider, who leads Afghan troops sent from Kabul, told the BBC that the militants' main cave complex had been captured.
But he said the troops' movements were being held up as the terrain was checked for land mines.
Another commander, General Abdullah Joyenda, told Reuters news agency that the battle of Shah-e-Kot was "over".
Coalition troops had "taken control of the entire Shah-e-Kot Valley" and the militants were retreating he said, speaking in Gardez after returning from the combat zone.
US and Afghan troops have been engaged in bloody fighting since 1 March to dislodge the militants, with the US suffering its heaviest combat losses of the Afghan campaign.
'No resistance'
An Afghan deputy commander, Mohammad Aref, said troops had entered the valley in force at 1130 local time (0700 GMT) from three directions and had met no resistance.
But he added that it was unclear if the US-led operation, codenamed Anaconda, was completely over, as the militants may have taken up position elsewhere.
"We are not in a position to say whether the operation is over or not," he cautioned.
There has been no comment from the Pentagon.
Eight US soldiers and at least three Afghan allies have been killed in the operation while the US puts militant losses in the hundreds.
The Afghans said on Tuesday they had found the bodies of at least eight militants in the valley.