One British fighter drowned a jihadist in a puddle, while another killed three extremists by beating them to death with the butt of his rifle.
Almost every member of the elite unit returned to operations two days after their miracle escape, a source told the Daily Star.
The team were reportedly ambushed by the ISIS fighters as they completed an intelligence gathering operation close to Mosul, northern Iraq.
After a four hour gun battle with the terror cell, in which roughly 20 ISIS fighters were said to have been killed, the SAS team were trapped by a river bed with then 10 bullets left between them.
Rather than be kidnapped and beheaded, the group resolved to go down fighting, convinced they were all about to die.
They shook hands, said goodbye to each other, and charged at the jihadiis.
The source said: "Rather than die on their knees, they went for a soldier’s death and charged the IS fighters who were moving along the river bed.
"They were screaming and swearing as they set about the terrorists.
“They fired off their few remaining bullets and dropped several terrorists before setting about them with whatever weapons they had.
“They bayoneted, slashed and beat the IS fighters to death."
One soldier in the Special Boat Service, an elite unit of the Royal Navy, killed one of the terrorists by forcing his face into the mud and holding him down until he drowned.
“He then picked up a stone and smashed it into the face of another gunman wrestling with one of his colleagues.
“Another killed three of the fighters by using his assault rifle as a club.
"Others were stabbing at the gunmen who wanted to capture the British troops alive.”
The soldiers were described as fighting like "crazed warriors", killing 12 terrorists in the space of five minutes.
The surviving ISIS soldiers are said to have fled.
“It was a classic case of Who Dares Wins," the source added.
Apart from two soldiers who suffered minor gunshot wounds, all the members of the unit were said to have returned to active duty two days after their incredible battle.