"Tidermene has fallen into the hands of DAESH," an elected official from the town, who has retreated to Menaka, told AFP, using the Arabic acronym for the Islamic State organization.
"They are distributing Korans to the population (and) moving around town with weapons," he said.
He and others spoke on condition of anonymity for fear of reprisals.
The village was captured Monday night.
One Tidermene refugee now in Menaka told AFP that, given the town is a former JNIM stronghold, ISGS fighters are now seeking out civilians who own weapons or walkie-talkies.
Another elected official told AFP the jihadists had instructed the village's residents to continue with business as usual, but to be prepared to begin paying the "zakat", an Islamic tax.
The UN and human rights organizations say jihadists have carried out punitive attacks against communities they accuse of helping the state or refusing to join their ranks.
"The Malian army controls Menaka and is ensuring the protection of civilians", an army officer told AFP when asked about the capture of Tidermene.
Tidermene's fall follows months of fighting by Islamic State in the Greater Sahara (ISGS) to seize the northeastern town of a few thousand inhabitants some 75 kilometers north of Menaka.
All the region's main administrative subdivisions are now under the group's control.
A major ISGS offensive has since early 2022 been underway in the region of Menaka and that of Gao, further west.
The Malian military, the UN stabilization mission and armed groups loyal to the state remain present in Menaka.
The regions have seen intense battles between ISGS fighters and the Al-Qaeda-linked Group to Support Islam and Muslims (JNIM), as well as with former Tuareg independence fighters who signed a peace deal in 2015, and loyalists who once fought the independence fighters.
The jihadists have stepped into a vacuum left when French forces departed last year, experts say.
Hundreds of civilians have been killed in the violence, and communities have been displaced en-masse.