The head of the provincial council of Nineveh, of which Mosul is the capital, confirmed the Islamic State group had captured the dam on Thursday.
“Fierce fighting took place which eventually saw Daash (Islamic State) take control of the dam,” Bashar Kiki told AFP.
The dam on the Tigris river, on the southern shores of Mosul lake about 50 kilometres (30 miles) north of the city, provides electricity to much of the region and is crucial to irrigation in vast farming areas in Nineveh province.
A 2007 letter to Prime Minister Nuri al-Maliki sent by then US ambassador Ryan Crocker and the former commander of US forces in Iraq, David Petraeus, warned of the consequences of a disaster at the dam, which was assessed to have serious structural weaknesses.
“A catastrophic failure of Mosul dam would result in flooding along the Tigris river all the way to Baghdad,” the letter read.
“Assuming a worst case scenario, an instantaneous failure of Mosul dam filled to its maximum operating level could result in a flood wave 20 metres deep at the city of Mosul,” it said.
The Islamic State has already resorted to the weaponisation of dams, as was the case earlier this year when it flooded large areas around the city of Fallujah, west of Baghdad.