Boko Haram, which formed in Borno, has waged an insurgency since 2009 to carve out a state based on sharia (Islamic law) in the northeast of Africa's most populous country. More than 15,000 people have been killed and some 2.4 million displaced.
Damasak, captured by Boko Haram in October 2014, was part of an area around the size of Belgium that the jihadist group controlled in northeast Nigeria by the end of 2009.
Its attacks have spread to neighboring Niger, Chad and Cameroon, which prompted those nations to combine troops to form the Multi-National Joint Task Force (MNJTF).
MNJTF spokesman Colonel Mohammad Dole said troops cleared militants from Dutse, a village in Niger, before moving to the Nigerian border town Damasak around 10 a.m. (0900 GMT).
"In continuation with clearance operation of towns and villages, troops of Sector 4 in Diffa (Niger) have successfully cleared Dutse village, captured and occupied Damasak town," he said.
"The forces are coordinating to stabilize the immediate environs," he added.
The troops were supported by an air force from MNJTF member states, he said. More than 30 Nigerian soldiers have been killed in previous attempts to recapture Damasak.
Since a push early last year led by the Nigerian army, supported by troops from neighboring states, most of the territory has been seized back from the militants but the group still stages guerrilla attacks in the region.