"Several terrorists died while many are captured. Mopping up of entire Gwoza and her suburbs is ongoing," the Armed Forces reported via Twitter on Friday.
An earlier tweet said that government forces had destroyed the headquarters of the "terrorists' self-styled caliphate."
Boko Haram seized Gwoza and declared a caliphate in the town in August 2014.
Last week, Nigerian President Goodluck Jonathan said he hoped that all territories currently controlled by Boko Haram in northeastern Nigeria would be retaken within a month.
President Jonathan is in the running for a second term in Saturday's general election, originally scheduled for February 14, but postponed by six weeks.
Boko Haram initiated military operations in Nigeria in 2009 intending to impose their version of Islamic rule. The group, founded in 2002, first opposed Western-style education, and is currently operating on the border of Nigeria, Niger, Chad and Cameroon.