El-Obeid, the capital of North Kordofan, has been hemmed in by the paramilitary Rapid Support Forces (RSF) since its war with the regular army erupted in April 2023.
In a statement, army spokesman Nabil Abdallah said that their forces had "managed to reopen the road to El-Obeid and merge" with soldiers east of the city.
El-Obeid -- the heart of Sudan's Kordofan region -- sits at a crucial crossroads connecting the capital Khartoum to the country's western region of Darfur, which the RSF has all but conquered.
"El-Obeid's strategic importance, especially its airport and its position linking western Sudan with the centre and south, makes today's operation one of the most critical militarily," an army source told AFP, requesting anonymity because they are not authorised to brief the media.
For nearly two years, the conflict in Sudan has pitted army chief Abdel Fattah al-Burhan against his former deputy Mohamed Hamdan Daglo, who leads the RSF.
The war has killed tens of thousands, uprooted over 12 million and created the "biggest humanitarian crisis ever recorded" according to the International Rescue Committee.
Inside the city, thousands of residents took to the streets to celebrate, witnesses told AFP.
"Lifting the siege brings life back to the city," said Ahmed Hussein, a 53-year-old trader in El-Obeid.
He told AFP that residents have suffered for a year and a half from shortages of goods and medicine under the siege.
"We breathed a sigh of relief after months of suffering and patience," Nadia Hamed, a 35-year-old teacher, said.
Gibril Ibrahim, the finance minister in Sudan's army-aligned government, described breaking the siege as a turning point in the conflict.
"This strategic victory represents a qualitative shift in the path of a larger triumph," he said in a post on Facebook.
He added that Sunday's operation is also "a significant step towards lifting the siege" on North Darfur's besieged capital of El-Fasher.
It is the only major city in Darfur still under army control and has been under RSF siege since May.
Reopening the routes would also allow the delivery of essential food and medicine to the Kordofan region, Ibrahim added.
The war has divided Sudan, Africa's third largest country, with the army in control of the north and east while the RSF holds nearly all of Darfur and parts of the south.
The army has recently surged through central Sudan, recapturing key cities, while advancing in a major offensive to retake the capital Khartoum.
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