Foreign troops will confine their activity to training Iraqi soldiers after Daesh was pushed out of its stronghold of Mosul late last year.
The US-led coalition signalled on Monday the end of major combat operations against Daesh in Iraq by announcing the "deactivation" of its land forces command headquarters.
Iraqi Prime Minister Haider al-Abadi declared victory over Daesh in December, five months after his forces recaptured the country's second city Mosul in a protracted battle with the militants.
Daesh, however, continues to carry out bombings, assassinations and ambushes in different areas of Iraq, and remains active in neighbouring Syria.
In a statement, the US-led coalition said its relationship with the Iraqi armed forces would evolve "from supporting and enabling combat operations to the training and development of self-sufficient Iraqi security-related capabilities".
"The Combined Joint Forces Land Component Command Headquarters was deactivated today at a ceremony in Baghdad, signifying the end of major combat operations against ISIS (Daesh) in Iraq and acknowledging the changing composition and responsibilities of the coalition."
Brett McGurk, the US envoy to the coalition, tweeted: "From Falluja to Tikrit, Baiji, Ramadi, Sinjar, Mosul and points in between, our coalition has been proud to stand beside Iraqi forces and (Kurdish) Peshmerga as they liberated their country and 4.5 million fellow citizens from ISIS (Daesh)."
Milestone in #Iraq as our @coalition's Combined Joint Forces Land Component Command HQ is deactivated marking the end of major operations against #ISIS and a shift to supporting Iraqi forces to root out terrorist cells and protect Iraqi borders. 1/3 https://t.co/YVdD6azcpb— Brett McGurk (@brett_mcgurk) April 30, 2018
NATO nations agreed in February to a bigger "train-and-advise" mission in Iraq as part of a broader international effort to help rebuild the country from more than a decade of war as combat operations wind down.
The US wants to avoid a repeat of its 2011 withdrawal from Iraq and the subsequent rise of Daesh as security unravelled.
"The lesson learned from Iraq (is that) it is dangerous to leave too early because we may be forced back into combat operations," NATO Secretary-General Jens Stoltenberg said in February.