They have poured into the streets enjoying basic rights they had been denied for two years, including shaving off their beards and smoking.
US-backed Kurdish and Arab fighters fought 73 days to drive IS out of Manbij, close to the Turkish border.
About 2,000 civilians being used as human shields were also freed.
Reuters news agency spoke to a resident of Manbij who described a spot where people were beheaded. "For anything or using the excuse that he did not believe [in God], they put him and cut his head off.
"It is all injustice," he said.
"I feel joy and [it is like a] dream I am dreaming. I cannot believe it, I cannot believe it. Things I saw no one saw," a woman said screaming and fainting, according to Reuters.
Another woman thanked the fighters that had set them free: "You are our children, you are our heroes, you are the blood of our hearts, you are our eyes. Go out, Daesh [Arabic name for IS]!"
Life under IS
- Women are forced to cover up; in one case, a woman in Mosul, Iraq, was challenged for not having her hands fully covered
- The minimum punishment is flogging, which is applied for things like smoking a cigarette. Men caught smoking have had their fingers amputated, while a female dentist who treated men was publicly beheaded, the UN said in a report in 2014
- Men are not allowed to be clean-shaven
- Prayer checks are carried out on the streets
- Men are ordered to attend compulsory Sharia classes if their trousers are too long