President Joe Biden says US forces will end their combat mission in Iraq by the end of this year, but will continue to train and advise the Iraqi military.
The announcement came after Mr Biden held talks with Iraqi Prime Minister Mustafa al-Kadhimi at the White House. There are currently 2,500 US troops in Iraq helping local forces counter what remains of the Islamic State group. Numbers of US troops are likely to stay the same but the move is being seen as an attempt to help the Iraqi PM.
The US presence in Iraq has become a major issue since top Iranian general Qasem Soleimani and the leader of an Iran-backed Shia Muslim militia were killed in a US drone strike in the capital Baghdad last year.
Political parties aligned to Iran have demanded the withdrawal of all forces from the US-led global coalition against IS, despite the continuing threat posed by the Sunni jihadist group.