Ain al-Arab, would be an important defeat for IS.
The group has lost 1,196 fighters since it began its advance on the town on September 16, according to the Observatory.
At one point, the Jihadist group looked poised to overrun Kobane, which lies on the Syrian-Turkish border.
It wielded sophisticated weapons captured from military bases in Syria and Iraq and committed hundreds of fighters to the battle.
But Kurdish forces gradually pushed back the Jihadists with the help of the US-led air raids and a group of fighters from Iraq’s Kurdish peshmerga forces.
Analysts say the loss of Kobane is both a symbolic and strategic blow for IS, which set its sights on the small town in a bid to cement its control over a long stretch of the Syrian-Turkish border.
Since the group emerged in its current form in 2013, it has captured large swathes of territory in both Syria and Iraq.
It has declared an Islamic “caliphate” in territory under its control, and gained a reputation for brutality, including executions and torture.
But its apparent failure in Kobane could put the brakes on its plans for expansion in Syria.
“Despite all that manpower, all that sophisticated weaponry, IS couldn’t get the city, so it’s a big blow for their plans and its a great achievement for the Kurds,” Kurdish affairs analyst Mutlu Civiroglu told AFP.
“Kobane sets an example on the ground, showing that when you have skilled fighters on the ground with the support of air strikes, this danger, these forces, can be stopped and eliminated.”
Civiroglu said YPG forces would likely spend the next few days clearing Kobane before expanding outwards to surrounding villages captured by IS.
Civilians were largely spared in the fighting because the town’s residents evacuated en masse, mostly across the border into Turkey, in the early stages of the battle.