Egypt has appealed to the kidnappers of its ambassador in Iraq to treat him well and view him as an Arab patriot.
Sherif had only been in Iraq for five weeks before he was kidnapped
Foreign Minister Ahmed Aboul Gheit said Egypt was working with Iraqi officials to secure the release of Ihab al-Sherif who was seized in Baghdad on Saturday.
He said he understood the "fury" of the Iraqi people, but stressed that Mr Sherif "is working for the benefit of the Iraqi and the Egyptian people".
Mr Sherif arrived in Iraq as Egypt's top diplomat only five weeks ago.
He was subsequently designated ambassador, making Egypt the first Arab country to upgrade ties with Iraq.
The move was praised by Iraq's foreign minister last week.
But Egypt's decision may have angered the kidnappers, says the BBC's Heba Saleh in Cairo.
The US has been encouraging Arab countries to appoint ambassadors to Baghdad in an attempt to strengthen the new state and undermine the insurgency.
Many withdrew their ambassadors from Iraq after Saddam Hussein invaded Kuwait in 1990.
Unnamed sources said Mr Sherif was buying a newspaper on Saturday evening when "two BMWs full of gunmen blocked his way and kidnapped him".
Witnesses told the Associated Press news agency one of the gunmen had hit him on the head with a pistol butt as the others shouted that he was "an American spy".
A security cordon is in place around the Egyptian embassy
The gunmen then shoved Mr Sherif into the boot of a car and sped away, witnesses said.
Police have built a security cordon around the embassy and US soldiers searched Mr Sherif's car, which was parked close to the reported kidnap scene.
Mr Aboul Gheit said officials at both countries' embassies in Iraq and Egypt were working to secure Mr Sherif's release.
He urged everyone involved "to handle the situation wisely".
"Our colleague... went to Iraq to serve the interests of the Iraqi people. We hope that they try their best in locating him and that he returns safely to his family," he said while in Libya for a summit of the African Union.
"We understand the fury of the Iraqi people but this man is working for the benefit of the Iraqi and the Egyptian people and therefore we wish that he is treated accordingly."
More than 270 foreign hostages from 37 countries have been captured since the Iraq insurgency flared after the siege of Falluja in April 2004.
Many more Iraqis have been taken hostage, usually accused of collaborating with the invasion.
Several Egyptian nationals have been abducted, but most have been released unharmed.
Last July, militants briefly kidnapped Egyptian diplomat Mohamed Mamdouh Qutb.
In that incident, gunmen claiming to be from the Lions of Allah Brigade said the kidnapping was a response to an Egyptian offer to train Iraq's security forces. Egypt later withdrew the offer.