Basra International Airport had been used as a UK military base during the conflict but the Iraqis have now resumed full control.
It came as the UN mandate for US and UK troops - put into place after the invasion in March 2003 - expired.
Iraq will now take greater control of its own security, but US and UK forces will remain under a new deal.
The transfer of the airport at Basra, the country's second biggest city, was one of Prime Minister Gordon Brown's remaining key tasks in southern Iraq.
It is clear Basra International Airport is now an international airport with good potential for future growth
Major General Andy Salmon
The transfer of control, marked with a handover ceremony in the airport's VIP lounge, followed the signing of a Memorandum of Understanding by British military commanders and Iraqi transport officials in Baghdad.
Military and civilian aircraft will continue to operate side-by-side at the airport but Iraqi civilians are now in control.
Major General Andy Salmon, general officer commanding of British troops in Iraq, said: "The Iraqis have been operating their own airport in Basra with minimal involvement from the UK for several months," he said.
"From today they will gain further autonomy, taking over the running of the air traffic control tower.
"It is clear Basra International Airport is now an international airport with good potential for future growth."
In December, Mr Brown said British troops would leave Iraq by the end of July 2009.Military operations are due to end by 31 May and the remaining 4,100 UK service personnel will leave within two months.
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