The fall of Mullaittivu is a major loss to Tiger rebels who were dislodged from their political capital of Kilinochchi three weeks ago.
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Since July 2007, the Tigers have been steadily losing territory.
"We have cleared 95 percent of the work (to defeat the Tigers)," Fonseka said. "The end of terrorism is near and we will definitely win. The Tiger garrison of Mullaittivu was destroyed today.
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He said troops fought their way through 40 kilometres (25 miles) of thick jungle and climbed over earth barriers erected by the Tigers in their drawn-out offensive to take Mullaittivu. He said the offensive began almost a year ago.
"The Tigers are now confined to a small strip of between 20 kilometres by 15 kilometres (300 square kilometres, 115 square miles)," he said.
Earlier in the day, small groups of special forces backed by 50,000 soldiers and helicopter gunships entered th