The villages are located near the strategic Mosul Dam, which the Peshmerga had recaptured from the extremists in mid-August.
The dam, Iraq's largest, is located on the Tigris River, which flows through the capital Baghdad.
After having suffered setbacks by the Islamic State early this month, the Peshmerga, backed by US airstrikes, have been able to retake several areas from the al-Qaeda splinter group in the past two weeks.
Jihadists on Thursday torched an oilfield near the rebel-held northern city of Mosul in a bid to block advancing Kurdish forces, the Peshmerga military said.
The Ain Zala field is located in the militant-held area of Zumar, which the Peshmerga are preparing to wrest back, the military told /on/condition/DP anonymity.
The Islamic State has seized several oilfields in northern Iraq where it has made considerable territorial gains since June.
The radical Sunni group uses revenues from illegal oil sales to fund its activities, according to media reports.
The Islamic State's territorial expansion in Iraq and neighbouring Syria has prompted several countries to offer arms and military equipment to Kurdish forces fighting the militants in northern Iraq.
The German army has sent six soldiers to northern Iraq to coordinate German civilian and military aid packages.
The non-combat unit started Wednesday its mission at the general consulate in Erbil, the capital city of Iraq's autonomous region of Kurdistan, the army said.
The German government has said it will provide arms to Kurdish forces, although Chancellor Angela Merkel has repeatedly said no combat troops would be sent to Iraq.
The soldiers are to assist in the delivery of packages consisting of civilian and military supplies in coordination with the Iraqi government and Kurdish local authorities.
In late June, Islamic State leader Abu Bakr al-Baghdadi declared himself the ruler of an Islamist caliphate in the territory under his group's control in Syria and Iraq, raising fears of the emergence of a regional militant enclave.
Copyright dpa