Ethiopian jets reportedly bombed targets and tanks hammered key positions as the Islamic forces attempted to melt into the surrounding territory.
"I can confirm to you that our forces have captured Kismayo," Somalia's transitional prime minister, Ali Mohamed Gedi, told the Associated Press Monday.
Ahead of the arrival of the government forces, gangs skirmished in the streets of Kismayo, and witnesses said the southern coastal city was descending into chaos.
"Everything is out of control, everyone has a gun, and gangs are looting everything now that the Islamists have left," a local businessman told the AP.
Despite the warnings of chaos, Gedi, whose government two weeks ago controlled only one major town in the war-torn nation, hailed the news as the final step toward a stable government.
"The warlord era in Somalia is now over," Gedi said at a news conference in the recently captured capital Mogadishu, giving a three-day deadline to hand over all weapons.
The Gedi government has operated with the assistance and backing of both the United States and Ethiopia. Ethiopian forces had entered the country months ago, seeking to keep the Islamic Courts movement from taking complete control of the country.
It was unclear how long Ethiopia may maintain a military presence in the nation. Ethiopian Prime Minister Meles Zenawi has warned he may keep his forces in Somalia to hunt for the Islamic Courts leaders.
The fall of Kismayo traps many of the Islamic leaders in the southern tip of the East African nation and neighboring Kenya said Monday it would seal its border to keep those fleeing Kismayo from slipping into their nation.
"Kenya cannot be a haven for people who are not wanted by their lawful government," Kenyan government spokesman Alfred Matua said.
Kenya was also looking into reports that three of the suspects it is seeking to arrest for their roles in the 1998 bombing of the American embassy in Nairobi could be among the Islamic Courts fighters. The U.S. State Department has also alleged the Courts leaders come from the ranks of the Islamic terrorist organization al-Qaida.
Despite the apparent end of the military campaign against Islamic Courts, activists and analysts expressed concern that the situation in Somalia remains unstable.
"There is a power vacuum already," Ali Said Omar, a peace activist living in Mogadishu, told the AP. "Everybody has taken his own weapons back. How can the government say it's in control?"
Additionally, the regional ramifications of the Islamist rout and the Ethiopian successes remained unclear. Eritrea, a nation that has repeatedly clashed with Ethiopia and was accused by the United States of funding the Islamic Courts, said Monday that what was happening in Somalia amount to American colonialism.
"There is a misrepresentation in the media. This war is between the Americans and the Somali people," Eritrean Information Minister Ali Abdu told Reuters by telephone. "External forces are trying to impose their liking on the Somali people. ... The issue is the geopolitical interest of the superpowers versus the choice of the Somalis," he said.
Even as the last of their forces retreated from Kismayo, Islamic leader warned that their campaign against the interim government and especially against Ethiopia was not over.
Islamic leaders vowed to begin an Iraq-style guerrilla war against Ethiopia, which has one of the largest armies in Africa.
"Even if we are defeated we will start an insurgency," said Sheik Ahmed Mohamed Islan, the head of the Islamic movement in the Kismayo region. "We will kill every Somali that supports the government and Ethiopians."
