The remaining forces, some 2,500 US and 1,000 coalition troops, deployed in Iraq will remain in the country but will shift away from combat roles.
The US-led coalition against Daesh has finished its combat mission in Iraq and will shift to a training and advisory role.
Iraq's national security adviser Qasim al Aaraji said on Thursday that the combat mission had ended on schedule ahead of the end of the year and that combat troops were to withdraw.
Aaraji was speaking after a meeting between the coalition and the Joint Operations commanders of the Iraqi security forces.
In effect, some 2,500 US and 1,000 coalition troops deployed in Iraq will remain there. They have been acting as advisers and trainers since mid-2020.
Iraqi interior ministry media official General Saad Maan told a news conference on Thursday that "the coalition will have completely finished the transition to a non-combat mission before the end of the year".
US President Joe Biden and Iraqi Prime Minister Mustafa al Kadhimi sealed an agreement in July to formally end the US combat mission in Iraq by the end of 2021.
US presence in Iraq
Western security and diplomatic officials say that calling the shift a withdrawal is misleading because it changes little in terms of the number of forces based in Iraq.
The US-led military mission focuses on countering the remnants of Daesh. It began its mission in 2014 as part of an international effort to defeat the group which had taken over vast areas of Iraq and Syria.
In recent months, dozens of rocket and drone attacks have targeted American troops and interests in Iraq. Never claimed, these attacks are systematically blamed by the United States on pro-Iranian Iraqi factions.