Iraqi Kurdish forces launched an offensive Monday to capture the town of Bashiqa from Islamic State fighters.
Kurdish peshmerga forces had surrounded the town for weeks ahead of the assault.
Peshmerga Lieutenant Colonel Safeen Rasoon told Reuters that an estimated "one hundred IS fighters are inside" Bashiqa.
Artillery bombardment and airstrikes on Sunday and early Monday preceded the offensive.
The town is about 13 kilometers northeast of Mosul, which is the largest city in Iraq still controlled by the Islamic State group.
Iraqi government troops, along with peshmerga forces, began an offensive to capture Mosul three weeks ago. Iraqi forces entered the outer limits of the city late last week, but fighting has slowed as battles began in more densely populated parts of Mosul.