(CNN) Manbij residents finally freed from the stranglehold of ISIS occupation celebrated in the streets Saturday, cutting off beards, burning niqabs and smoking cigarettes, things they weren't allowed to do during the terror group's two-year rule over the city.

Jubilation broke out in many neighborhoods after ISIS militants lost control of Manbij to U.S.-backed rebels, and the Pentagon said the center of the city was liberated.

The Syrian Democratic Forces (SDF), an alliance of Kurdish and Arab forces backed by the United States, has battled to take control of Manbij in northern Syria since May and hundreds have been freed in this latest mission, according to the Syrian Observatory for Human Rights.

Many can hardly believe they are finally rid of the Islamist militants' rule. Dozens of women in black niqabs -- the full-body coverings which are similar to burqas but leave the eyes exposed -- were photographed being freed by the armed rebels, many of them carrying babies, overwhelmed and in tears. One woman was seen hugging an armed female Kurdish soldier.

Chador: The full-body black garment leaves the face exposed. These Iranian women are wearing chadors at a political meeting in Tehran.

Chador: The full-body black garment leaves the face exposed. These Iranian women are wearing chadors at a political meeting in Tehran.

Niqab: The full-face veil exposes only the eyes. A Palestinian bride in Jericho wears this one.

Niqab: The full-face veil exposes only the eyes. A Palestinian bride in Jericho wears this one.

Burqa: This full-body garment has a mesh over the eyes. The burqa is widely used in Afghanistan and was required under the Taliban. These Afghan women are shopping in Herat.

Burqa: This full-body garment has a mesh over the eyes. The burqa is widely used in Afghanistan and was required under the Taliban. These Afghan women are shopping in Herat.

Burkini: The full-body swimsuit worn by Muslim women leaves only the face, hands and feet exposed. Here a woman in a burkini wades in the water with a child at Ghar El Melh beach in Tunisia.

Burkini: The full-body swimsuit worn by Muslim women leaves only the face, hands and feet exposed. Here a woman in a burkini wades in the water with a child at Ghar El Melh beach in Tunisia.

Hijab: The scarf worn tightly around the head and neck does not cover the face. It is the most common Islamic head covering. This Indonesian girl is shopping for a hijab in Yogyakarta.

Hijab: The scarf worn tightly around the head and neck does not cover the face. It is the most common Islamic head covering. This Indonesian girl is shopping for a hijab in Yogyakarta.

Do you know the difference between a hijab and a niqab? How about a burqa and a chador? Click through to read about the different types of headscarves some Muslim women wear.

Do you know the difference between a hijab and a niqab? How about a burqa and a chador? Click through to read about the different types of headscarves some Muslim women wear.

Footage from Kurdistan 24 showed people cheering and dancing in the streets.

A man pointed to an outside area and described it as an ISIS execution site.

"Here they used to execute people and hung their heads here and leave it for three days. They would execute people for anything, using the excuse he did not believe," he told Kurdistan 24.

A woman made the peace sign with both hands and she expressed her relief.

"Thank God we are happy my brother. Thank God we got rid of ISIS. May God hold them to account," she said.

Why is Manbij important?

JUST WATCHED US-backed forces set to retake Manbij from ISIS Replay More Videos ... MUST WATCH US-backed forces set to retake Manbij from ISIS 02:54

Defeating the militants in Manbij essentially blocks a supply route ISIS has between its heartland of Raqqa and Turkey.

ISIS seized Manbij around two years ago and has used the city as a hub for recruiting and processing foreign fighters, the Pentagon's Deputy Press Secretary Gordon Trowbridge told journalists, according to a statement.

He said militants also used it "for dispatching operatives across the Turkish border for potential use in external operations," the statement said.

The chief of the US mission to fight ISIS, Brett McGurk, confirmed on Twitter that the city center had been liberated.

He also said that ISIS was losing ground in its Libyan stronghold, Sirte.

But Trowbridge noted that there were "still pockets of opposition" in the Manbij's north, but that ISIS was "clearly on the ropes."

'Significant milestone'

"That ... is a major setback for ISIL at the hands of our partners the SDF, including thousands of Syrian Arab troops that are fighting to liberate their own homes. It is also the latest significant milestone in the coalition's efforts to cut off and eliminate a hub of ISIL activity located outside Syria," Trowbridge said. US government officials refer to ISIS as ISIL.

Syrian Kurds march at the funeral of fighters who died fighting ISIS in Manbij.

The SDF had flushed most of the ISIS militants from Manbij by last week, but on Friday the last of the militants began to flee.

"As you can see, when they withdraw from an area, they burn it up," an SDF member told Kurdistan 24.

"Any civilian who attempts to leave, they'll immediately shoot at him or her. While my colleagues provide cover, we get people out... We provided food to some of the civilians and took them to safety. We only still need to liberate about 5% of the area."

Trowbridge fell short of declaring the city fully liberated, but he described an ISIS defeat there as "inevitable."

The SDF, however, claimed the whole city liberated.

"It is now time for the good news, news that terrorism has been taken out of Manbij city. The city is now fully under our control," SDF spokesman Sharvan Darwesh said on his Facebook page Saturday.

Human shields?

The Pentagon said it had received reports that fighters were mixing with civilians to use them as human shields, but added it has not been able to verify the reports.

"We were besieged," a resident to Kurdistan 24. "They took us with them and used us as human shields to protect themselves."

JUST WATCHED Report: Syrian rebels making progess in Manbij Replay More Videos ... MUST WATCH Report: Syrian rebels making progess in Manbij 01:12

Other reports say the militants are fleeing in vehicles and are keeping civilians close as a way to prevent being bombarded.

"ISIL has consistently shown a willingness to put innocent lives at risk in blatant violation not only of the laws of armed conflict but of common human decency," he said.

The Syrian Observatory for Human Rights has documented the deaths of 1,744 civilians and fighters in Manbij since May 31.

The United States backs the SDF with airstrikes as well as arms and military training.

Since May 21, the SDF has liberated more than 1,000 square kilometers of territory from ISIS and taken out more than 600 fortified fighting positions, Trowbridge said.