Islamic State has as many as 25,000 fighters in Syria and Iraq, down from a previous estimate of up to 31,000, according to a US intelligence report revealed by the White House.
US officials cited factors such as battlefield casualties and desertions to explain the roughly 20 percent decrease in fighters, and said the report showed a US-led campaign to crush Islamic State was making progress.
The new intelligence estimate "means they continue to be a substantial threat, but the potential numbers have declined", said White House spokesman Josh Earnest.
"ISIS has sustained significant casualties," Earnest said.
Ground fighting efforts by coalition partners of the United States are having an effect in the conflict against Islamic State, also known as ISIS or ISIL, he said.
US-backed Iraqi security forces and tribal militias and moderate opposition groups in Syria have contributed. So too has a US-led air campaign that has launched more than 10,000 strikes against the Islamist extremists, Earnest said.
Finally, international efforts are beginning to stem the flow of foreigners seeking to join the movement.
"ISIL is having more difficulty than they've had before in replenishing their ranks, and we have long been aware of the need of the international community to co-operate to stop the flow of foreign fighters to the region," said Earnest.
The new intelligence report of 19,000-25,000 Islamic State fighters in Iraq and Syria compares with 2014 estimates of 20,000-31,000 fighters.
"The decrease reflects the combined effects of battlefield deaths, desertions, internal disciplinary actions, recruiting shortfalls, and difficulties that foreign fighters face travelling to Syria," said Emily Horne, a spokeswoman for the National Security Council.
Some North African jihadists who might otherwise have travelled to Syria to join Islamic State may instead have heeded calls by the movement's leadership to head to Libya, where the Islamists are fighting to expand their grip on territory on the Mediterranean coast.
The intelligence report did not account for the Islamic State's affiliates in South Asia, other parts of the Middle East and North Africa, where its Libyan branch is expanding.
There appear to be conflicting US estimates of the strength of the movement's Libyan affiliate. Defence officials put the number at some 3000, while other US officials put it at 5000-6000.