Syria's army has moved swiftly into towns and villages in the north-east of the country, which could lead to a confrontation with Turkish-led troops.
State media said Russian-backed Syrian forces entered the town of Manbij as part of a deal reached with Kurdish-led forces previously allied with the US.
Meanwhile, Turkish troops and allied Syrian militias were gathering near the town as they continued their incursion.
Turkey's offensive aims to push Kurdish forces from the border region.
Syrian state media said government forces had entered Manbij, in the area where Turkey wants to create a "safe zone" cleared of Kurdish fighters. Earlier, the army pushed into Tal Tamer and Ain Issa, where residents celebrated their arrival.
The deal is seen as a boost for President Bashar al-Assad as his troops return to those areas for the first time since 2012. The deployment came hours after the US announced that up to 1,000 American troops would leave northern Syria.
The Turkish offensive and US pullout have been internationally criticised as the Kurdish-led fighters were crucial allies of the coalition against the Islamic State (IS) group in Syria. There are fears about a possible resurgence of IS and the escape of prisoners amid the instability.
On Monday, President Donald Trump said a "small footprint" of US personnel would remain in southern Syria to continue to fight the remnants of IS.
What is known about the deal?
According to the Kurdish-led Syrian Democratic Forces (SDF), Sunday's agreement will allow the Syrian army to deploy along border areas controlled by Kurdish forces to "repel [Turkish] aggression".
In 2012, forces loyal to President Assad withdrew from the region to fight rebels elsewhere, letting Kurdish militias take control. Despite disagreeing with their attempts at self-rule, Mr Assad did not seek to retake the territory, especially after the Kurds became partners in the coalition against IS with US troops on the ground.
The agreement represents a significant shift in alliances for the Kurds, who said they had been "stabbed in the back" by President Donald Trump after he pulled dozens of US troops from pockets in the north-east last week.
The move effectively paved the way for the operation by Turkey, which views elements of the Kurdish groups in Syria as an extension of the banned Kurdistan Workers' Party, which has fought for Kurdish autonomy in Turkey for three decades.
Apart from fighting IS, the Kurds were fundamental for the US in limiting the influence of rivals Russia and Iran and keeping some leverage on the ground.
For now, Syrian forces will not be deployed between Tal Abyad and Ras al-Ain, where Turkey has focused its efforts. Kurdish-led officials insisted they would remain in charge politically, and retain order in the area.
A crisis also for Nato
The crisis in north-eastern Syria is also a crisis for Nato with both practical and political implications. The immediate fear is that much of the progress made towards defeating IS could be undone.
President Trump's willingness to throw the Kurds to the wolves has not gone down well with many allies; France, Germany and perhaps less stridently, Britain, have all urged the Turks to halt their operation. Spain has threatened to pull out its Patriot missile battery in Turkey in protest.
Mr Trump, who did little to try to stop the operation, has equally threatened to "totally destroy and obliterate" the Turkish economy if they go too far - an extraordinary statement coming from one Nato member to another.
Nato Secretary-General Jens Stoltenberg says that despite his deep concerns, Turkey will remain an important member of the alliance. He insists that Nato will get over its current divisions. But if you add to this crisis Ankara's recent decision to purchase Russian surface-to-air missiles, there is a clear sense that Turkey is slowly drifting away from it.
What has the international reaction been?
On Monday, Turkish President Recep Tayyip Erdogan said Turkey would not scale back its offensive, "no matter what anyone says", adding that the operation would continue until "ultimate victory is achieved".
With a "safe zone" reaching 32km into Syria, Turkey wants to resettle up to two million Syrian refugees currently on its territory. Many of them are not Kurds and critics warn this could lead to ethnic cleansing of the local Kurdish population.
The Russian government, a close ally of Mr Erdogan, said it did not want to entertain the possibility of a clash between Russian and Turkish forces in Syria, and said it was in regular contact with Turkey's authorities.
Calling Turkey's operation a "dangerous and destructive path", President Trump also said he would "soon" impose sanctions against current and former Turkish officials and tariffs on steel, saying that he was "fully prepared to swiftly destroy" Turkey's economy.
In other developments:
- The EU's Foreign Affairs Council called on Turkey to withdraw its forces from northern Syria, saying the offensive "seriously undermines the stability and the security of the whole region"
- EU countries committed to suspending arms exports to Turkey but stopped short of an EU-wide arms embargo; Ankara said it would examine its co-operation with the EU due to its "unlawful and biased" attitude
- UN Secretary-General Antonio Guterres called for an immediate de-escalation of hostilities
What is the situation on the ground?
Areas under SDF control came under heavy bombardment over the weekend, with Turkey making gains in the key border towns of Ras al-Ain and Tal Abyad. President Erdogan said his forces had captured 109 sq km (42 square miles) of territory, including 21 villages.
At least 50 civilians have been killed inside Syria and 18 over the border in southern Turkey, reports say. Kurdish forces have confirmed the deaths of 56 of their fighters while Turkey says four of its soldiers and 16 pro-Turkish Syrian fighters have been killed in Syria.
Up to 160,000 civilians had been displaced, according to UN humanitarian agency OCHA, which said the number was expected to rise.
The fighting has also spilled over to areas close to IS detainee camps. Officials at the Ain Issa camp said nearly 800 relatives of foreign IS members had escaped. The camp holds about 12,000 displaced people, previously including nearly 1,000 foreign women and children with jihadist links.
Turkey has said it will take responsibility for IS prisoners it finds during its offensive.