Speaking at a news conference Tuesday night, he warned the terrorists that they must surrender or be killed.
Since launching the offensive in October, government forces have driven Daesh from eastern Mosul and are now making advances in the western sector.
The city on the Tigris river is the last urban stronghold in Iraq of the militants, who declared a caliphate in parts of Iraq and Syria after they captured it in 2014.
"The battle now is in the final stages. Daesh become day after day surrounded inside a tight area and they are in their final days," Abadi said, Reuters reported.
He also pledged to treat the families of Daesh terrorists fairly.
"Let me be very clear, we will preserve families of Daesh who are civilians but we will punish the terrorists and bring them to justice if they surrender," he said.
"They are cornered and if they will not surrender they will definitely get killed."
Abadi said he would visit Washington next week and meet US President Donald Trump to discuss the war. The United States is providing air and artillery support in the offensive.