The deal was signed by Iranian Deputy Interior Minister Hossein Zolfaqari and his Iraqi counterpart in a meeting held in Tehran on Monday morning.
Based on the deal, from now on Arba’een pilgrims can enter Iraq with their passports and letters of insurance.
The long-awaited agreement came after repeated calls by Iran for a visa-free regime in order to facilitate the visit of Iranian pilgrims to the neighbouring state.
The Arba’een mourning ceremony is one of the largest religious gatherings in the world.
It marks the 40th day after the martyrdom anniversary of the grandson of Prophet Mohammad (PBUH), Imam Hussein (AS).
Each year, pilgrims, mainly from Iraq and Iran, travel long routes on foot to Karbala, where the holy shrine of Imam Hussein (AS) is located.
Last year, around 20 million pilgrims from all over the world gathered in Karbala on Arba’een.