Militiamen allied to Yemen's exiled government are reported to have driven Houthi rebels out of a southern city.
Southern separatist fighters and Sunni tribesmen had regained control of Dhalea following heavy fighting on Monday, officials and residents said.
It is the first major advance by the Houthis' opponents since Saudi-led coalition air strikes began in March.
Overnight, seven members of the same family were said to have been killed in an air strike in a northern village.
Residents of al-Mohssam, which is close to the border with Saudi Arabia, told the Reuters news agency that two children were among those who died.
Cross-border clashes were also reported after medics said one person was killed by suspected Houthi shellfire that targeted the Saudi city of Najran on Monday.
The Houthis and army units loyal to Yemen's former leader, Ali Abdullah Saleh, took control of Dhalea last month as they advanced southwards after overrunning the capital Sanaa in September.
But on Tuesday, residents said that militiamen and tribesmen allied to exiled President Abdrabbuh Mansour Hadi had regained full control of Dhalea, a day after seizing the main security headquarters and strategic mountaintop buildings.
The pro-government fighters had also managed to capture the base of the 33rd Armoured Brigade, which is loyal to Mr Saleh, and seize large caches of weapons and ammunition, armoured vehicles, and Katyusha rocket launchers, officials told the Associated Press.
"The whole city of Dhalea is now under the control of the Popular Resistance Committees," local tribal chief Saleh al-Mansub told the AFP news agency, referring to an umbrella group of southern factions.
Pro-government forces also made advances near the Houthi-controlled al-Anad military base, outside the southern city of Aden on Tuesday, residents told the Reuters news agency.
Saudi-led coalition aircraft also reportedly carried out up to 18 air strikes on Houthi positions in the Khor Maksar and Crater areas near the port, they added.
President Hadi took refuge in Aden after escaping house arrest in Sanaa in February, but he fled to Saudi Arabia at the end of March as the Houthis and their allies advanced on the city.
Yemen's journalists' union meanwhile said that two reporters detained by the Houthis had been killed in an air strike on a military base, and accused the rebels of "premeditated murder", AFP reported.
The UN says two months of fighting and air strikes have left at least 1,037 civilians dead, including 130 women and 234 children, and displaced half a million others.
There has also been massive destruction of civilian infrastructure, and a sea and air blockade has caused severe shortages of food, water, medicine and fuel.
The humanitarian charity Oxfam warned on Tuesday that at least 16 million people, or two thirds of the population, had no access to clean drinking water.