Fighters of the Islamic State in Iraq and the Levant (Isis) captured Rutba, 90 miles (150km) east of Jordan’s border, officials said.
They earlier seized a border crossing to Syria and two towns in western Iraq as they advance towards Baghdad.
The insurgents intend to capture the whole of the predominantly Sunni Anbar province, a spokesman told the BBC.
Also on Sunday,
Iraq’s government said an air strike on the militant-held northern town of Tikrit killed 40 militants, but witnesses said civilians died when a petrol station was hit
Iran’s supreme leader Ayatollah Ali Khamenei, in remarks quoted by Reuters news agency, accused the US of trying to keep Iraq under its hegemony and place its own “Yes Men” in power
US Secretary of State John Kerry is in Cairo and expected to travel to Iraq soon to press for a more representative cabinet, hoping this could ease tensions between the Sunni and Shia communities
Isis on the Euphrates
Rutba is strategically placed on the main road between Baghdad and Jordan.
It is the fourth town in what is Iraq’s largest province to fall in two days to the Sunni rebel alliance, which Isis spearheads.
On Saturday the militants said they had taken the towns of Rawa and Anah, along the Euphrates river.
And Iraqi officials admitted Isis fighters had also seized a border crossing near the town of Qaim, killing 30 troops after a day-long battle.
According to the rebels, army garrisons, including at the area’s command centre, abandoned their bases and weapons, and fled.
An Iraqi military spokesman described the withdrawal from Rawa, Anah and Qaim as a “tactical move… for the purpose of redeployment”.
Estimated 10,000 fighters in Iraq and Syria
Joined in its offensives by other Sunni militant groups, including Saddam-era officers and soldiers, and disaffected Sunni tribal fighters
Exploits standoff between Iraqi government and the minority Sunni Arab community, which complains that Shia Prime Minister Nouri Maliki is monopolising power
Isis led by Abu Bakr al-Baghdadi, an obscure figure regarded as a battlefield commander and tactician
The capture of the frontier crossing could help Isis transport weapons and other equipment to different battlefields, analysts say.
The rebels are confident that towns they do not already control along the Euphrates valley will fall without much of a fight, with the help of sympathetic local tribes, says the BBC’s Jim Muir in Irbil.
Since January, they have held parts of the provincial capital Ramadi, and all of nearby Falluja, half an hour’s drive from Baghdad.
A spokesman for the Military Councils, one of the main Sunni groups fighting alongside Isis, told the BBC the rebels’ strategic goal was the capital itself.
In the meantime they are clearly trying to take the string of towns along the Euphrates between Falluja and the western border, says our correspondent.
There is deep pessimism in Baghdad about the government’s war against Isis, which appears better trained, equipped and more experienced than the army, diplomats and politicians have told the BBC.
The Sunni extremists attacked the city of Mosul in early June and have since seized swathes of territory across Iraq.
The Iraqi government has urged the US, Europe and the UN to take immediate action to help deal with the crisis – including targeted air strikes.
Iraq’s air force ran out of American Hellfire missiles two weeks ago, and only has two Cessna planes capable of firing the missiles.
But Isis has established secure safe havens, including some in neighbouring Syria, which will be difficult to target, experts say.
And experts warn that using air strikes now would endanger civilians.
“[The militants are] now fully enmeshed with the civilian population and it’s just almost impossible to use air power or cruise missiles to strike at fighters that way,” said Christopher Harmer, an analyst from the Institute for Study of War in Washington.
The US, which pulled out of Iraq in 2011, is sending some 300 military advisers to Iraq to help in the fight against the insurgents there.
But the White House insists there is no purely military solution to the crisis.