General David Petraeus, the outgoing US military commander in Iraq credited for improving security there, is to pass control to General Raymond Odierno.
US Secretary of State Robert Gates is in Baghdad to oversee the handover.
Levels of violence were high across Iraq when Gen Petraeus assumed command in February 2007. In Baghdad alone, there were 40 car bombings that month.
He implemented President George W Bush’s “surge” plan, which brought the number of attacks down dramatically.
But on the eve of Gen Petraeus’ departure, a female suicide bomber blew herself up in Diyala province, killing 20 people on Monday.
The incident was a reminder that violence across Iraq could easily escalate again, says the BBC’s Mike Sergeant in Baghdad.
The big challenge for Gen Odierno will be finding ways to stop that sort of violence escalating at a time when the number of US troops are shrinking, our correspondent adds.
Under the surge plan – which saw nearly 30,000 US troops deployed to trouble spots in Iraq – coalition forces moved out of large bases and into highly populated areas.
Two other factors were crucial, our correspondent says – a ceasefire by the Shiite militia and deals with former Sunni insurgents.
In a BBC interview before his departure, Gen Petraeus said recent security gains were “not irreversible” and that the US still faced a “long struggle” in the country.
When asked if US troops could withdraw from Iraqi cities by the middle of next year, he said that would be “doable”.
In his next job leading the US Central Command, Gen Petraeus will also oversee operations in Afghanistan.
Last week, Mr Bush announced a cut of 8,000 US troops in Iraq by February – with some 4,500 being sent to Afghanistan.