Ethiopian troops withdrew from the central Somali town of Beletwein overnight Friday, after controlling the key town since July 24, Radio Garowe reported.
Hundreds of locals took to the streets and walked by areas where Ethiopian soldiers used to patrol, including the main administration building and the police station.
It was not clear why the Ethiopian army pulled out of Beletwein, which has the third-largest concentration of Ethiopian forces deployed in Somalia after Mogadishu and Baidoa.
But the region's traditional elders have been negotiating with Ethiopian commanders to leave Beletwein during the Muslim holy month of Ramadan.
Islamic Courts officials claimed victory, saying the Ethiopian troops withdrew after loosing many soldiers in insurgent attacks.
Beletwein residents told Radio Garowe that Islamist fighters had entered the town and took control of strategic areas, including two key bridges.
Officials appointed by the Somali interim government reportedly left Beletwein a day earlier, but it remains unclear whether or not the Ethiopian soldiers who withdrew to a military base in the outskirts of the town will return.