The US has said it will close its consulate in the southern Iraqi city of Basra, blaming increasing threats from Iran and Iranian-backed forces.
In a statement, US Secretary of State Mike Pompeo said all but emergency staff would be relocated to Baghdad.
He repeated earlier warnings that the US would hold Iran responsible for any harm to its citizens or facilities.
Basra is home to more than two million people and has witnessed violent protests in recent weeks.
Mr Pompeo, who accused Iran of failing to prevent recent rocket attacks he said were directed at the consulate, said there were "increasing and specific" threats against Americans and US facilities in Iraq.
The US decision comes amid growing tensions with Iran, after President Donald Trump re-instated economic sanctions on Tehran following the US withdrawal from the 2015 nuclear deal.
At the UN this week, the two sides taunted each other, with Mr Trump's national security adviser, John Bolton, warning Iran there would be "Hell to pay" if it crosses the US.
Iran, the region's main Shia power, has fostered ties with Iraq's Shia majority since the downfall of long-term leader Saddam Hussein.
Earlier this month, protesters in Basra set alight government and political buildings, including the Iranian consulate and the headquarters of an Iran-backed paramilitary force, after a number of people were killed in clashes with police.
The protests in the city have been fuelled by growing public anger over poor infrastructure, contaminated water and a lack of jobs in a region that generates much of Iraq's oil wealth.
They have also denounced what they perceive as Iran's control of local affairs.