Islamist militant group Al-Shabaab has taken control of the port city Merca, residents say.
Merca, some 70km (45 miles) south-west of Mogadishu, is now the biggest town under Al-Shabaab control.
African Union forces who had held the port city for three-and-a-half years withdrew earlier on Friday morning.
The loss is a major setback for the African Union force (Amisom) in its decade-long battle against Al-Shabaab, the BBC’s Tomi Oladipo says.
The governor of Somalia’s Lower Shabelle region Ibrahim Adam told the AFP news agency that Al-Shabaab secured control without fighting.
“Amisom forces moved out at midday and the local administration and all other Somali security forces left a few minutes later – and then heavily armed Al-Shabaab militants entered the town,” local resident Ibrahim Mumin told AFP.
“They have been addressing residents at the district headquarters,” he added.
Another resident, Mohamed Sabriye, told AP news agency that Al-Shabaab fighters had hoisted their flag over the city’s police station and administrative headquarters.
The withdrawal from Merca comes three weeks after Al-Shabaab overran an African Union military base outside the southern Somali town of el-Ade, saying they had killed about 100 Kenyans soldiers.
Kenya has not said how many of its troops died.
Al-Shabaab was ousted from the capital, Mogadishu, in August 2011, but still has a presence in large areas of southern Somalia and often stages attacks across the country.
While the retreat is not happening in battle, it’s clear that the African Union Mission in Somalia (Amisom) is having problems securing the region.
Sources within the mission say this is a tactical move. The problem, however, is that as soon as these troops leave, Al-Shabaab militants are swiftly replacing them.
It’s no doubt a major setback for the regional forces, seeing as they would have to fight their battles afresh to regain these regions.
In January, Kenyan troops withdrew from other parts of southern Somalia after they suffered heavy losses in an an attack on their base in el-Ade.
As Al-Shabaab fills the void, it will be looking to win the support of the communities – something the regional coalition has failed to do.
And that would be disastrous overall for the regional efforts to bring peace to Somalia. The nations contributing to Amisom are expected to meet in Djibouti later this month to review their campaign.