In a televised address, Abadi vowed to retake Iraq’s second city of Mosul, saying it would be “the fatal and final blow” to IS.
The recapture of Ramadi was welcomed by US Secretary of State John Kerry, who said IS had suffered a major defeat.
The jihadists seized Ramadi in May, in an embarrassing defeat for the army.
Iraqi government forces have been fighting to retake the city – about 90km (55 miles) west of the capital, Baghdad – for weeks.
TV pictures on Monday showed troops raising the Iraqi flag over the government complex in the city centre.
Army spokesman Brig Gen Yahya Rasul said forces had “liberated” Ramadi in an “epic” victory.
Iraqi officials gave no immediate death toll from the battle.
“2016 will be the year of the big and final victory, when Daesh’s presence in Iraq will be terminated,” Abadi said on state television, using another name for Islamic State.
“We are coming to liberate Mosul and it will be the fatal and final blow to Daesh,” he added.
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