The Taliban say they have taken control of the city of Sheberghan in the northern Afghan province of Jawzjan.
An Afghan defence ministry spokesman told the BBC government forces were still in the city and would clear out the Taliban “soon”.
This is the second regional capital to fall to the militants, after Zaranj in the south-western province of Nimroz fell on Friday.
It is a major blow to security forces, with battles raging across the country.
There are also reports of heavy fighting in Kunduz in the north and Lashkar Gah in the south.
Violence has escalated across Afghanistan after US and other international forces began to withdraw their troops from the country, following 20 years of military operations.
Taliban militants have made rapid advances in recent weeks, capturing large swathes of the countryside, and are now targeting key towns and cities.
Sheberghan is a stronghold of the former Afghan vice-president and warlord, Abdul Rashid Dostum, whose supporters have been leading the fight against the insurgents.
Local media reports that 150 people travelled to the city to help Afghan forces.
The Taliban first took control of the governor’s compound on Friday during intense fighting, before it was retaken by Afghan security forces.
However, the region’s council chief, Babur Eshchi, told the BBC the militants were now in control of the whole city, except an army base, where fighting was still going on.
Afghan defence ministry spokesman Fawaad Aman told the BBC’s Newshour programme government forces were still in “the majority” of the city, including the airport, and insisted Sheberghan would be “clear of terrorists soon”.
But he conceded the Taliban had captured parts of the city, and that government troops had retreated “to prevent civilian casualties”.
According to the Afghan defence ministry, US B-52 bombers have hit Taliban positions in the city.
Taliban officials meanwhile said they had taken a prison in Sheberghan. Video on social media shows hundreds of inmates leaving the city jail.
Other provincial capitals under pressure include Herat in the west, and the southern cities of Kandahar and Lashkar Gah.
The Afghan military says dozens of Islamist fighters, including senior commanders, have been killed in Lashkar Gah. The Taliban however have denied the military’s version of events.
And in the Afghan capital Kabul this week, the Taliban shot dead President Ashraf Ghani’s former spokesman and carried out a bomb attack on the house of the acting defence minister.