Part of the US defence group Northrop Grumman has been given a year and $48m (£28.7m) to create a new Iraqi army.
The contract was awarded to Northrop's military training arm, the Vinnell corporation, which already trains the Saudi National Guard.
An adviser to the US authorities in Iraq said the first unit would be a light infantry division made up of twelve-thousand men, with two more units to be added the following year.
The new troops will replace the old Iraqi army which was disbanded by US-led forces a month ago.
Vinnell's website is recruiting former US Army and Marine officers and other specialised military experts to work in Iraq.
Vinnell is expected to start work this month and should be completed within a year.
Major General Paul Eaton, former commander of the US Infantry Centre at Fort Benning in Georgia will oversee the training.
The Defense Department said five bids were received for the army contract, but did not name the other firms which took part in the tender.