Iraqi forces now outnumber US troops in the country and are playing a key role in battling insurgents, US President George W Bush has said.
Many of the President Bush's audience recently served in Iraq
Speaking to 25,000 soldiers at Fort Hood, Texas, Mr Bush said US troops were helping to free Iraq.
But he gave no indication of a timetable for US troop withdrawal.
Mr Bush compared Saddam Hussein's fall to the collapse of the Berlin Wall in 1989, and said the democratic message was being heard across the Middle East.
He said Iraqis now had confidence their own security forces could protect them.
About 140,000 US troops remain in Iraq, while Iraq's security forces number 150,000, the president said.
Mr Bush said the end of Saddam Hussein's regime two years ago heralded a "global democratic revolution" that was already under way across the Middle East.
"As the Iraq democracy succeeds, that success is sending a message from Beirut to Tehran that freedom can be the future of every nation," he said.
Mr Bush was speaking as violence continued in Iraq.
At least five Iraqis were killed and three others injured in a car bomb attack on a US convoy in the northern city of Mosul.
Also on Tuesday, US Defence Secretary Donald Rumsfeld paid a surprise visit to Iraq.
He warned against political purges when a new government takes power.
After the invasion, the US administrators disbanded Iraq's former army but the decision is now widely acknowledged as a mistake and the interim government has re-employed many experienced soldiers who served under Saddam Hussein.
The BBC's Caroline Hawley in Baghdad says Washington is now concerned that purges of these officers brought back to the security forces could undermine efforts to defeat the insurgency.
Iraqi Shias suffered brutally under the rule of Saddam Hussein and may seek retribution, she says.
A special force of 10,000 commandos, set up last year, is almost entirely drawn from the former military.
One official told the BBC that some of them had participated in crushing a Shia uprising in 1991.