The Yash Raj Productions film will be the first Bollywood production to shoot in the country, the Hindustan Times reports.
The Iraqi government is said to have arranged security for the crew and granted permission for the production house to film in the region.
Khan's co-star and reported former girlfriend Katrina Kaif will not be travelling to Iraq, as she is not required for these particular scenes.
Director Kabir Khan plans to shoot an extended action sequence in the country, capitalising on the acclaim that Khan received for the action portions of Dabangg.
The 2006 YRF project Kabul Express, featuring John Abraham and Arshad Warsi, was partly filmed in Afghanistan.
Bollywood director Suresh Kohli recently announced plans to make a film about former Iraqi leader Saddam Hussein.