The Memorandum of Understanding (MoU) was signed in the Turkish capital of Ankara by Deputy Chief of Turkish General Staff Gen. Hasan Igsiz and his Iraqi counterpart Nasier Abadi, the army said in the statement.
Proceedings for the MoU, which envisages cooperation on military training and technical issues, had been going on for over a year, it added.
Separately, Iraqi Vice President Tareq al-Hashemi was to hold talks with Turkish President Abdullah Gul and Prime Minister Tayyip Erdogan on Wednesday in Ankara, the semi-official Anatolia news agency reported.
The two neighboring countries have intensified relations that have been hit by security concerns.
Ankara has sought close ties with Baghdad to enlist Iraqi support against the outlawed Kurdish Workers' Party (PKK), whose members use northern Iraq as a base for launching attacks in Turkey.
Turkish security forces conducted frequent operations against PKK militants in eastern and southeastern Turkey.
The PKK took up arms in 1984 to create an ethnic homeland in southeastern Turkey. So far, some 40,000 people have been killed in the past two-decade conflicts.
Turkey's military forces have taken tougher actions against the PKK after the country's legislature extended the government's mandate to launch cross-border operations against the rebels in northern Iraq.