By Maria Abi-Habib

SIRTE, Libya—The first page of Abu Bakr’s notebook contains Arabic translations of basic English words. It ends with a safety guide for handling explosives: “Be careful.” “Don’t be afraid.” “Keep the triggers away from children.”

As Islamic State tightened its grip on this Mediterranean city last year, closing schools and restricting social life, it trained hundreds of recruits, many of them foreigners, in the Arabic language, Islam and warfare to help extend its self-declared caliphate to Europe’s doorstep, according to documents recently discovered in the group’s offices here.

The notebook of the fighter who took the name Abu Bakr was reviewed by The Wall Street Journal along with some 150 other documents left behind by militants who fled or were killed or captured in battle as Libyan militias backed by U.S. airstrikes moved in recent months to reclaim the city. The Islamic State militants were under threat on Monday of being routed in the last neighborhood they still control in the coastal city, the group’s last major bastion in the Mediterranean country.

The papers offer rare insights into how the group governed and sought to win over the population and erect a satellite state in Libya.Detailed lists of prisoners with their offenses and corresponding punishments show how the militants enforced their austere vision of Islamic rule. Tax documents show how they tried to curry favor with some residents by confiscating money and jewelry from the wealthy to distribute to the needy, while also filling their own coffers.

The paper trail also reveals the pedestrian bureaucracy behind the group’s brutal rule in Sirte, the largest city Islamic State has ever held outside Iraq and Syria.

The last names of the militants or of civilians featured in the documents found, such as prisoner lists or tax forms, have been redacted. Attempts to reach Abu Bakr and others whose names appear in the documents were mostly unsuccessful, as phone lines across Sirte largely have been cut off.

At the headquarters of the group’s Hisbah, or morality police, a spreadsheet listed crimes and punishments. One prisoner got 10 days in jail and 10 lashes for “transporting a woman” who wasn’t accompanied by a male relative or guardian.

A meticulous tax code found at another office showed how Islamic State funded itself at locals’ expense. Farmers were to turn over a calf if their herd reached 39 cows, for instance, and a four-year-old camel if they owned up to 79 camels.

Those who didn’t pay were hunted down through warrants issued to checkpoints around the city. One warrant, on Islamic State letterhead, sought a cattle-herder named Salem from the al-Jiza neighborhood who drove a Toyota, detailing his license-plate number.

In Libya, Islamic State was able to establish and run a state with tax-collection offices, police, courts and even an immigration office to support foreign recruits, a highly organized venture otherwise seen only in Iraq and Syria, where its leaders are based, U.S. officials say.

With the Libyan government’s battle for Sirte all but won and militants holed up in a last redoubt by the shoreline, the extremists’ hopes to extend the caliphate to within some 350 miles of Europe have dimmed.

Still, the document trove makes clear that Islamic State’s nation-building ambitions succeeded, however fleetingly, in Libya as they fell short with the group’s other affiliates from Nigeria to Yemen, said Aymenn Jawad al-Tamimi, a researcher at the Middle East Forum, a U.S.-based think tank that focuses on radical groups.

“Libya offered the best environment to develop: chaotic and with ample links to Syria and Iraq, as many Libyans had previously joined Islamic State and its predecessors,” he said.

Many of those Libyans returned home from Syria and Iraq in recent years to set up multiple branches that today threaten the country’s stability. Islamic State’s leader Abu Bakr al-Baghdadi in 2014 dispatched some of his top emissaries to help establish the group in Libya, one of whom was killed in November by a U.S. strike.

Islamic State announced its takeover of Sirte in a sleekly produced video in February 2015 that showed its soldiers beheading 21 Egyptian Christians on a sandy stretch of shoreline near the city, the waves turning red with blood.

Frightened residents who had the means departed. “We had to cut the courses in the middle of the year,” said Dr. Soad Erhoma, a professor of gynecology who recalled masked men overtaking the University of Sirte that March. She left for Tripoli, the capital, within weeks. “I was afraid for my children and we fled.”

Those who remained recall Islamic State proclaiming its rule with promises of dignity being restored to Sirte—disenfranchised at the hands of militias from more powerful city states—and the group’s plans to set up a social-welfare state to care for all.

Mohammed Aded, a construction worker, said he was summoned in April 2015 regarding the zakat—a tax all Muslims are obligated to pay to religious authorities—to a tax office where a department head, an Eritrean, reprimanded him in broken Arabic for not paying and let him go with a warning.

As Islamic State solidified its hold on the city in the months that followed, the group began to extract more wealth from residents. Men from the zakat office went on the prowl, knocking on the doors of offenders, including Mr. Aded’s neighbor, who was jailed and flogged for failing to pay a tax he said he didn’t owe. The zakat office said his herd of cattle was twice as big as it actually was, Mr. Aded recalled, nearly bankrupting him.

At the headquarters of the morality police, a dozen boxes filled with confiscated gold jewelry and stacks of money secured with rubber bands were scattered about. They are now in the hands of pro-government militias.

Extortion of the local population under Islamic State rule is one of the group’s biggest revenue sources. A key U.S. goal in fighting the extremists is to retake territory, choking its finances by denying them a taxable population.

The funds Islamic State collected also went to pay fighters and to feed what residents described as its fighters’ obsession with women.

Militants would receive more money a month if they were married and even more for each child they had, according to one document, a setup similar to that in the group’s branches in Syria and Iraq and an important perk to draw in recruits. The policy fueled an aggressive quest to marry local girls and women, a touchy subject for Sirte’s conservative population.

Mr. Aded said foreign fighters from sub-Saharan Africa would routinely hold him up at checkpoints and ask about his daughters. They told him if he married them off to fighters, he would have an easier time navigating Islamic State’s bureaucracy.

At one checkpoint, Mr. Aded said, a fighter asked about local dowry customs. When Mr. Aded responded that the price of marriage was 300 grams of gold jewelry for the bride and two sheep and a camel for the family, the fighter scoffed.

“I don’t think your women are worth that much. How about a dinar for your daughters?’” he recalled one of them saying, about 73 cents.

At the abandoned headquarters of the morality police, one room was stuffed with female mannequins confiscated from storefronts and abayas—all-covering robes—deemed immodest because of their tight fit, elaborate embroidery or rhinestones.

Down the hall, jottings for a crash course in Islam for recent converts were left scrawled on a whiteboard. The writing, in English, explained Mohammed as the Muslim equivalent of Christianity’s Jesus, suggesting basic lessons for foreign recruits. Also on the board was a step-by-step guide to ablution before prayer, with a drawing of a human figure with arrows to illustrate which body parts to wash.

A document distributed to commercial stores declared what was forbidden: signs in languages other than Arabic and photos of “souls” or people, considered blasphemous by religious hard-liners.

Desks at the religious police headquarters were piled with stacks of prisoner ledgers, day-to-day updates of each detainee, their crime and punishment. Down the hall, ordinary rooms were converted into prisons, with wooden doors ripped off and replaced by bars.

In a spreadsheet, one prisoner is accused of owning pornography and received 60 days in jail and 60 lashes. Another detainee was imprisoned for failing two courses in Islamic law or Shariah. His punishment was another Shariah course.

Abu Bakr’s notebook was found at a water-treatment plant with a tower Islamic State used as a sniper’s nest as the militants tried to fortify Sirte against advancing pro-government forces this summer.

The efforts to learn Arabic suggest he was a foreign fighter. On the notebook cover an Islamic State flag was drawn, and written on a page was a question: “What is the punishment for those who miss prayer?”