Rebels are reportedly manning checkpoints in and out of the Ras Lanuf, 370 kilometres west of the rebel stronghold city of Benghazi.
They marked the town’s takeover with celebratory gunfire, firing a rocket propelled-grenade in sign of victory.
Ras Lanuf is just over 200 kilometres from Ajdabiya, which was on Saturday the first town to fall back into rebel hands after a week of coalition air strikes.
There were no signs of any major damage at oil installations of Ras Lanuf, which had fallen to Kadhafi's forces on 12 March.
Media reports say the rebels appear to be in control of the entire east of Libya.
Trucks carrying rebel fighters flooded the road to the oil town, with many carrying on to Bin Jawad, a hamlet 50 kilometres further west.
Meanwhile Sirte, on the Mediterranean coast, was hit overnight Saturday by allied warplanes, with some media reports saying it has become “a ball of fire", with residents fleeing into the desert.